Mortgage market in Spain hots up

Increasing share of the market

In an effort to capture a greater share of the non resident buyers market Banks in Spain have started to look at a number of new initatives.

Caixa Bank have rebranded a number of their existing Branches in the Coastal areas aand major Cities specifically to attract overseas clients.

Looking for a 25% share of the mortgage market for foreigners the new Bank called Hola Bank will give some underwriting and mandate desicions back to the regions and Branches to allow for a quicker and more flexible service.

Other Banks responses

Other Banks like Sabadell who pushed up margins at the begining of 2015 have rapidly backtracked as it became clear they had done so at just the time opther banks were lowering theirs.

Bankinter who moved to 60% loan to value after the crisis are now looking for ceratin applications to be underwritten at 70%.This will be cases where the borrower is of good financial standing, has low debt to income ratios and the loan size is a large one.

Other Banks have told their branch staff to not lose applications because of pricing even if they have currently maintained higher standard terms.

Interest rates fall

Rates are now averaging 3% and on the odd occassion it might be possible to achieve as low as 1.5% above Euribor. At 1.5% the Banks bearly make money so achieving 2% above Euribor is more realistic and can be considered for most applicants a good deal in todays market.

The requirement for borrowers to take out life cover a bone of contention with many mortgagees is still in place with most Banks. Lenders like UCI and Targo Bank are however now offering loans without putting pressure on those Banks who still insist on insurances being taken.

More changes will come

2015 will doubtless see more by way of changes and all Banks are now keen to attract non resident loans having moved away from them in the last few years.

With fundamental changes made to the way Banks assess an application and by lending against valuation or purchase price whichever is the lower, the quality of new loans is higher and the liklehood of defaults lower.

Read the full article: The changing face of non resident lending in Spain