When the 12-month Euribor rate hit a record now in September it made mortgages cheaper than ever to pay off. The official rate is negative, so since most Spanish mortgages are calculated on Euribor plus one point, the interest rate payable for a large loan like a mortgage has never been lower.
This, together with the fact that banks are lending again, is a very welcome point, especially now that the pound has dropped against the euro and dollar post-brexit. The latter doesn’t affect buyers in most countries in Europe, but it makes property more expensive to British buyers converting sterling into euros when buying in Spain.
In spite of this, as of yet there are no indications that British buyers have lost their appetite for property in Marbella, and the attractive level of property prices on the Costa del Sol – especially when compared with the UK and in particular hotspots such as London – together with very low interest rates is likely to be a significant contributing factor.
“Much of the added expense for British buyers caused by the weak pound is offset by attractive property prices and low interest rates,” says Michael Liggan CEO of Altavista Property, “a bonus which becomes a double whammy for Eurozone buyers not affected by any currency drops.” Moreover, with the low stock yields and interest rates on your savings across large parts of the world, it makes sense to take advantage and invest in real estate instead.
“Here the low rates of interest no longer punish your savings but make your repayment lower.” In effect, the vast amount of your payment goes to servicing the loan, which means you can also opt to pay it off quicker if you set a fixed monthly amount, as a lot of the interest you pay on a loan is frontloaded, i.e. included in the first months and years.
All of this is quite apart from capital gains, for which the current price levels of property in Marbella and the economic analyses provide plenty of upward scope in the coming years. The Marbella property market is experiencing solid growth at sustainable levels, thus avoiding the hype of overvaluing of a property bubble and creating safer, more stable conditions for growth and a soft landing when the current growth cycle ends, which is expected to be in about five years.
Mild growth cycles such as this are normally followed by a mild slowdown before growth resumes a short while afterwards, making this not a risky boomtown investment but a solid one that outperforms the stock markets and most other forms of investment today. Contact Altavista Property. As Marbella property specialists and developers in our own right we can provide expert advice and support for people looking to buy, enjoy the Marbella lifestyle and invest wisely all in one.