Banks lending targets for 2014
At the beginning of the year for the first time in 5 years most Spanish Banks gave their branch networks mortgage targets. After many consecutive months of net outflows the Banks looked to stabilise and grow their mortgage books through 2014.
Spanish Banks struggle to reach half year lending budgets
Whilst the doors to new mortgage lending was opened little was done by the Banks earlier in the year to encourage new applicants by way of product improvement and pricing.
This lack of understanding that just being open to lend does not mean you will do mortgages has left the Banks well behind their numbers in both capital lent and numbers of new loans particularily in the non resident mortgage market.
Other nationalities applying for a mortgage in Spain have been shocked at the high interest rates which have been well above the rates in many other countries.
With an improving cost of funds situation and better liquidity it is unrealistic to expect new mortgagees to be paying for the past mistakes the Banks have made.
Positive mortgage news for the second half of 2014
The positive news is that in an effort to encourage new mortgages at least 2 of the big 5 Spanish Banks have finally started to introduce new mortgage products, have improved their application process and most importantly are reducing margins above Euribor to realistic and sustainable levels.
The Premier product launched a couple of months ago can now be approved for purchases of € 250k or more down from a minimum of € 400k. The first year premium rate has now been dropped to the first 6 months only and has decreased from a minimum of 3% to a minimum of 2.5%. Variable margins now start at 1.5% above the 12 month Euribor.
With property prices at all time low, currency rates improving and better mortgage terms the second half of 2014 should see an increase in completed mortgages in Spain.
Read the full article : Spanish Banks drop interest rates to encourage mortgage completions
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