Few clients escape legal action by the bank when it comes to mortgage default. Not even property owners who hand over their keys to the bank and return to their home countries, victims of the financial situation in Spain and with no family or social resources here to fall back on. But the banks have all the time in the world and the law does not prevent them from following up a legal judgement in another country.
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According to a recent newspaper article, Spain’s main banks are once again offering mortgage loans on the same terms as they did before the crisis in an effort to shift their backlog of properties, many of which were seized during that period.
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HOW bad Europe’s debt crisis gets depends largely on Spain, which would be much harder to rescue than smaller economies like Greece. How bad things get in Spain depends largely on the banks, which are already trying to find an additional €15 billion ($21.1 billion) to meet new capital requirements imposed by the government. And how bad things get for Spanish banks depends largely on the country’s unfolding property bust. Nestling at the heart of these worries is land.
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A recent court ruling in Spain has offered a lifeline to overseas property buyers fighting to get back “lost” deposits from the country’s banks.
As investors continue to battle to get back deposits paid on non-existent overseas homes, a Cantabrian judge has ruled that a bank (Caja Cantabria) responsible for protecting a client’s funds, failed in its duty.
It appears that finally banks are starting to lend again to those looking at buying Costa del Sol properties. Although more demanding of proof of income, etc… slowly but surely the financial taps are being opened, with up to 100% offered in certain cases.
The downgrading of Spain was done for strange reasons. Spain’s has a debt to GDP of 90% (against 144% of for Greece) and a budget deficit of 7% (against Greece’s 14%). More importantly, the spread over German bunds is 250 bps against 700bps. With an AA rating (compared to Greece’s BB), even after the recent downgrading from AAA, Spanish creditworthiness is strong.
It has recently been announced that the Bank of Spain will be introducing new rules in the next few weeks to double the amount written off by Spanish banks and Cajas (saving banks) when the banks hold repossessed properties for longer than a year.
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For those of you with mortgages in Spain, I thought you could you a bit of good news. The Euribor, the rate normally used to calculate mortgages in Spain, has fallen drastically to its lowest rate ever! It currently stands at 1.909%. So many of you who have been feeling over the last year should soon start to see a substantial dorp in repayments.
