This is based on a further downturn of the property market equivalent this year to a drop of 19% in values.
What this audit has not done is assess whether the value of current assets held on the books of the Spanish Banks is actually realistic already. There is a big difference between what is required if prices drop further based on realistic values now, and what would be needed if prices drop further and the assets are already overstated.
The markets will sadly work this out for themselves so it will be unrealistic to expect the issuing of this data will have any positive medium term affect on cost of funds and generate a general increase in confidence levels. This will only come after the findings of the more detailed audit due out on the 31st July.
The positives relating to what is happening is that, come what may, at some point this year the Banks will have to make positive moves to start to sell their stock at very realistic prices and deal with the problems, something they have all resisted until now.
The press comment on Spain continues to paint a bleaker picture than those of us on the ground see and the biggest danger is this becomes self perpetuating. Whilst the market is not at the level where serious investors should consider buying (we are some way away from the quick buck scenario) there are bargains out there for those buyers keen to make a life style purchase.
Banks despite all the bad news are in general still lending whilst a few Banks have withdrawn either openly or behind the scenes from lending, equally many have not.
As yet we have seen no increases in the margins being charged over and above those implemented across the board at the beginning of the year.
International Mortgage Solutions