Skip to content

empresario firma contrato detras de modelo arquitectonico de casa 2379 1670 2 - Most abusive elements in the contract of a Spanish mortgage

It is common to find mortgage loans signed a few years ago that is at the same time referenced to the IRPH, contain floor clauses and the obligation to pay all the formalization expenses. In this post, we detail the most abusive elements in a mortgage contract and where they are located.

...continue reading "Most abusive elements in the contract of a Spanish mortgage"

According to an article reading in El País, the government may inject public funds into the banking system if this is necessary to save the banking system. 

Euro 300x216 - New Push to Uphold Spanish Banks

The government had guaranteed not to give money to the banking industry which is struggling in the wake of a collapsing ten years of housing boom.

"If it was necessary to reactivate credit, to save the Spanish financial system, I wouldn't rule out injecting public funds, like all European countries have done," Mr. Rajoy said in interview with Onda Cero radio stations.

On the other hand, an official at Spain's finance ministry said measures that are expected to be approved by the cabinet on Friday will include guidelines to remove impaired real-estate assets from banks' balance sheets.

The segregation of toxic assets is seen as key to completing the clean up and calming investors.

The Spanish finance ministry official explained that the government and central bank are studying a specific cleanup plan for Bankia SA and Banco Financiero y de Ahorros SA, which could include a total change of their management. Newspaper El País said Monday the government also plans an injection of state funds via convertible bonds with a rate of about 8 per cent.

Sources: El País, Wall Street Journal. 

The Spanish government is trying to put the country mortgage market back on track, and it is forcing takeovers and mergers to accelerate the change.

Banco Sabadell acquired CAM bank for €1 in December 2011 and BBVA acquired Unnim bank for the same price this month, and Catalunya’s CaixaBank has purchased Banca Cívica, becoming the leading financial institution in Spain in terms of assets.

Although Spain did not have official subprime mortgages as the United States, in the late 2000s it did fall into unrealistic mortgages, which consequences nowadays are banks having to repossess a meaningful number of properties, converting them in enormous real estate owners with no buyers.

‘As the property market in Spain boomed, many banks took a naive approach to lending money and they are suffering for it now. Whilst the UK has various checks and balances in place to prevent the recurrence of scandals such as the endowment mortgage mis-selling of the 1980s and 1990s, Spain has yet to get a watertight grip of its financial products although Rajoy is making huge strides,’ explained Marc Elliott, independent mortgage consultant and owner of Fluent Finance Abroad.

Mortgage 300x224 - Changes in the Spanish property lending market

‘Deals such as those seen in the past are either non existent or hard to find but if you have a good income and clean credit history the banks will lend. Certain banks did not fall into the reckless subprime trap and are lending pretty much as they were prior to the credit crunch,’ he pointed out.

‘If you are a first time buyer and you don’t have a large cash deposit then it might be wise to consider a bank property. If you have a sizeable deposit at your fingertips it would probably be better to look at the traditional real estate market as these properties tend to be slightly better value for money,’ said Elliott.

‘At the moment banks are looking to get the best price possible for their properties to try and recoup the original funds that were lent, they do this is by slightly inflating asking prices and offering excellent finance terms such as little or no money down deals,’ he added.

‘Always speak to more than one mortgage consultant to make sure you are satisfied that you are getting the best person to represent your interests. If anyone suggests that obtaining mortgage finance in Spain is easy, they are not being completely truthful,’ said Elliott.

Source: Property Wire