What happened in 2016
2016 was a year of little change for Spanish mortgage applicants abut major market changes for the Banks.
Spanish Banks had a number of challenges thrown at them during the last 12 months.
Market conditions affecting lending
These included a number of factors. Firstly the Banks lost their case on floor rates meaning they had to remove them from new and existing contracts and compensate borrowers who had paid more interest than if the floor rate had not been in place.
Secondly Brexit hit hard both the non resident buying market and the cost of buying in Spain as sterling was hit hard.
For a short period this currency fluctuation brought in new business as cash buyers sought to gain a loan but long term the drop in sterling will affect the buying market in total.
No cohesive Government in Spain after the July elections held back the housing market as Spanish buyers held off on high ticket items such as a home until the political landscape and taxation levels became more stable.
December court case lost
In December the Banks lost another court case on the normal practice of passing on the registration costs of both purchase and mortgage deeds to the borrower. The implications of this in the current low margin lending market have yet to unfold.
Cost of funds started to increase and fixed rate product types which saw very low interest rates halfway through the year started to climb and will continue to do so through the first few months of 2017.
Will risk assessment be relaxed
The only areas the Banks still have control over are risk criterias and flexibility of product types. If they are to meet the loan targets they want in 2017 the Banks are going to have to look closely at what in this challenging market allows them to increase profitability without losing volume or market share.
Read the full article :- Spanish lending news and views for 2017
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