Constant changes to lending criteria in Spain

What is happening in the Spanish Banking system

After years of providing lending in Spain and countless historic mistakes one would hope that the Spanish Banks had learnt a few lessons and were striving to improve.

The last few weeks would suggest most of them are in disarray when it comes to implementing and deciding on criteria.

It maybe that the dual pressures of the Risk management teams versus the commercial teams are pulling the process apart but most Banks need to get a grip and start thinking about their long term approach to mortgages or they wil risk putting the market back to the doldrums.

How is Spain different

In most countries whilst lenders retain as they should the right assess their current criteria and product and to respond to market conditions as they see fit, genrally speaking there is at least some level of stability and a clear stratergy on lending fed down from the top.

In Spain the reverse sems to be true. Spanish Banks appear to have no clear medium or long term stratergy preffering to chnage things at a whim often without any consideration to what this might do to their service levels or with any real logic applied.

Changes to criteria and their impacts

In the last few weeks we have seen one lender make 4 new statements in quick succession to criteria which have affected mortgage applications. When announcing them they have done so on the basis that this has been the case for sometime and have affected applications where had this been the case they could have said so at initial submission, not some weeks down the line.

One lender has carte blanche removed themselves from providing loans in certain areas they see as blackspots but have been daft enough to approve loans fiscally whilst saying they will only complete if the client buys elsewhere. Given in all these instances a property had to already be found to allow for underwriting the approval is about as useful as a chocolate teapot.

With no understanding of their market which they state they want to attract the same lender will now only sign loans where an applicant attends Notary in person. Given they are looking to attract non residents not based in Spain and it is perfectly legal to sign with a POA this rule has no logic to it. To gain a POA a Notary who is the upkeeper of all transactions in Spain must check the person giving POA is who they say they are. Is this lender therefore questioning the whole premise of the legal system in Spain. Who knows.

Getting to grips with professional service levels 

It is not unknown and has been the case for many years for Spanish Banks to lack basic customer service and be client focussed but taking weeks to reject applications on the basis they could never have been done in the first place should have been irradicated from the application process by now.

For those working in the industry whilst clients themselves may think headline rate is the only consideration, experts in the field know this is only part of the story. The best rate in world is of no use at all if the mortgage cannot be brought to completion.

Read the full article: The problem with Spanish Banks