Data out of Spain this week continues to be somewhat gloomy with on the surface little to cheer about on the financial front.
Many banks in Spain announced their half year profits this week and most made large provisions to cover future losses on assets and in order to come into line with new capital ratios enforced by the Bank of Spain.
Average interest rate data showed that average rates in Spain are now 4.32%. This means margins above Euribor are now topping 3% across the residential lending market in Spain.
What is interesting from this data is that whilst during boom times there was a significant difference between the margin above Euribor a Spanish Resident could achieve, in comparison to a Non Resident, given Non Resident mortgage rates are now averaging 3% to 3.25% above Euribor, and total average rates are 4.32% this discrepancy on residency status has actually all but disappeared.
For many banks who previously saw Non Resident mortgages as more risky and therefore priced them accordingly, the view has changed somewhat.
As Spanish unemployment rises each month and economic data suggest further contraction borrowers from other countries, who are in a more stable economic environment, have become a more attractive proposition for the Spanish banks and are seen as a lower risk.
The mentality shift around Non Resident versus Resident loans is not true of every bank but there is a now a wind of change on how Non Resident applicants are viewed and the current pricing now reflects this change across a number of lenders.
International Mortgage Solutions