A consumer survey undertaken by a consumer group in Spain, who visited 46 Banks requesting a loan for a property, in all cases were either told loans where only available for the banks own properties or the bank tried to sell one of their own properties to the client.
For agents who send clients to a bank directly this could become an increasing problem as clients, when visiting the branch to arrange the loan, may find themselves bombarded with alternatives that have high level attractive mortgage terms at the expense of the price you pay for what you get.
The new government has now clearly stated that no “bad bank” will be created to allow banks to drop bad assets into, and that banks must adjust asset values on their balance sheets to better reflect true value and support this loss from future profits.
Whilst this could have downward pressures on prices the real issue of bad assets for the banks is not the individual properties they hold but large developments, land and commercial properties. How much affect this will have on individual residential one off properties remains to be seen.
As the banks now know the write downs will have to come from future profits, and due to further downgrades by the ratings agencies, most banks have increased margins above Euribor again and linked and highly profitable products must be sold with the loan.
Whilst due to costs of funds, even at higher margins banks struggle to profit from a loan in isolation, in the years to come when markets calm down and interbank cost of funds drop banks will hold highly profitable mortgages as they refinance their books every year.
Lending is still available but presently 2.25% above 12 month Euribor is looking very competitive.
One of best rates remains Deutchse Bank where for clients only requiring 50% the standard costing is 1.8% above 12 month Euribor.
Lloyds International in a not unexpected move dropped their interest-only facility from 5 years to 2 as from the start of January. Given the pricing of having this product this move is unlikely to affect applications as taking interest only had already become non-cost effective.
We anticipate little change to the ongoing issues in 2012 with early feedback suggesting banks will look to lower their loan book levels and keep credit tight.
International Mortgage Solutions