Wednesday 25 February 2015

Banks in Spain go to war

Spanish Banks


The Banks in Spain since 2014 have increased their desire for new business.

Instead of devising a porfolio of products, based on profit required and tailored to applicants requirements, the lenders have kept in place the old fashioned and pricey product structures and just told Branch staff not to lose any new loans based on pricing.

This has led to a significant upturn in Banks being played off against each other.

Is this good for the consumer


Whilst it would appear on the face of it to be good for the clients going through a mortgage application process it is in fact only good for those who know it can be done, and if they happen to walk into a branch behind on targets.

For the majority of direct clients,who will not be aware they could negotiate, or who have not applied to more than one Bank what they may finally achieve will be a very uncompetative home loan.

Is there a better way forward


With the level of risk assessment tools the Banks have and historic information the lenders should and could be capable of putting together a more sophisticated range of mortgage products. They should be able to offer as standard, low cost flexible loans to the best risk clients,and competative and flexible loans to all borrowers.

This should be done at Head Office level so Banks keep control of their margins and the quality of the business. Just selling more of the same but at lower pricing to clients they think they may lose, with no reference to the overall risk and profibilty of that loan, is not how lending should be in the 21st century. Lack of mortgage product regulation means Banks can be less transparent than for instance their UK counterparts but this is still not the right way forward.

Read the full article : Dynamics of the spanish lending market

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