Spain Still Hotspot For European Property Investors

Although mortgage interest rates have increased, expat property investors can still get great deals.

September’s Spanish mortgage interest rates averaged 1.94 per cent, slightly below the EU average and trailing France at 1.51 per cent, Italy at 1.79 per cent and even Germany at 1.86 per cent. However, professionals in the sector are reassuring potential expat buyers that lender competition should still offer borrowers lower rates than those published. The interest rate rises were the direct consequence of Spanish lawmakers’ decision to charge stamp duty to all local banks, an unpopular decision which caused considerable problems for Spain’s Supreme Court.

Prime Minister Pedro Sanchez has promised the costs won’t be passed on to the consumer base, adding competition within the mortgage market will stop banks charging extra fees or hiking the rates. Even although a few banks have already increased their rates for initial fixed-term periods, the advantages of purchasing Spanish property mean investors in 2019 will still be able to get great deals. For example, Spanish mortgages can be had at up to 70 per cent loan-to-value, and even better terms are available on mortgages of 60 per cent or less.

The Spanish real estate market is looking to boom once Brexit is a done deal, as potential buyers will be able to plan ahead, secure in the knowledge that there won’t be tragic consequences caused by economic chaos. In the unlikely event of sterling recovering a good percentage of its lost value, interest from British investors may well bounce back to its previous levels. Even so, when Brits stopped buying, the only effect was that new expat markets from Belgium, the Netherlands, Scandinavia and the Gulf States stepped into the breach, ensuring Spain’s buoyancy as a real estate hub. The number of mortgages ranted during 2018 rose by 20.4 per cent, signifying the British market isn’t as essential as many believed. As usual, Andalusia topped the popularity chart, followed by Catalunya and Madrid, thus proving that when one door closes, several others spring open