Spanish Bank announces closures, but another launches new Spanish Mortgage product.

Which Bank in Spain is closing branches

Catalunya Caixa, who are owned by the Spanish Government are following in the footsteps of Bankia and closing a number of branches.

Particularly hard hit, as with Bankia, is the coastal areas of Andalucía.

 Catalunya Caixa are withdrawing from all their branches except for one in Malaga which will remain open.With Northern based roots the Bank will withdraw to its heartland in an effort to make itself a saleable entity.

Catalunya Caixas current problems and its requirement for a rescue were driven heavily by its lending to developers and businesses rather than individual loans.

Good news on mortgage product in Spain

On the positive side another Bank in Spain who had withdrawn, for the last couple of years, from lending in the nonresident arena has announced its intention to start lending again. This is good news for those buying in Spain who want the option to take a Spanish mortgage rather than use all their cash reserves.

The product has very tight criteria’s and will only be suitable for applicants with high levels of net incomes and low debts but the overall terms will be amongst the most attractive currently available.

When assessing affordability the Bank will only take account 75% of the net incomes shown on personal tax returns and will then look to see an overall debt to income ratio of no more than 35%.

Who might struggle to meet Bank criteria

Buy to let landlords from the UK will find the product out of their reach on most occasions as no rent generated will be taken into account, but full monthly mortgage liabilities will be.

Because only incomes shown on personal tax returns will be taken into account self employed may also find the criteria difficult to meet.

What are the product terms

The first year rate will 4.5% followed by Euribor plus 3%. The margin above Euribor is the cheapest on the market that comes without compulsory tie-ins outside of a Bank account and buildings insurance.

The applicants will be required to pay the premium for the buildings insurance for the first 5 years at completion. This is to avoid the client taking the buildings insurance in the first year and moving provider in the second year. After the 5^th year the client will be able to take other buildings insurance as long as the insurance is made out to the benefit of the Bank.

The maximum loan to value for nonresident applications will be 60% which is in line with most of market providers.

With their closest rivals charging 3.6% above Euribor a 3% margin without compulsory products is very competitive.

It can but be hoped that others will follow suit and either start to reduce margins to attract more business or for those out of it, come back into the lending arena.