ARE BANKS ‘MORE WILLING’ TO OFFER 100% MORTGAGES?

Banks in Spain seem to be relaxing their loan-to-value criteria and seem to be more prepared to offer 100% mortgages, say brokers. In the past few years, lenders were only willing to offer between 50% and 60% of either the purchased price or the value of the property based on their own surveys, whichever was deemed the lower. Now, say brokers, 80% mortgages are becoming more of a regular feature and they predict that 100% loan-to-value (LTV) finance is set to become commonplace over the coming year.

Banks have now acknowledged that property prices have fallen, and that buyer’s salaries have also dropped, but along with higher taxes and very few having savings which would enable them to put down a deposit of between 20% - 50% they need to change the tough stance of previous years. Those banks who are willing to lend the full purchase price of the property, will still, however, expect their customers to pay the fees involved in cash – a figure typically reaching 10% of the market value. In order to achieve their mortgage sales targets, banks need to look at the terms and conditions of the loan contract and not just the price of the property, says a leading broker. Low interest rates along with low property prices will not help banks reach their targets, which in turn, means they will need to offer higher LTV’s.

With the Eurobor having plummeted to new lows, mortgages have been consistently going down for the past four to five years. A typical 95,000Euro loan taken over a period of 35 years in 2007 would have cost in the region of 500 Euros a month, but this has now fallen to just over 290Euros at the end of 2014.


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