Mortgages in Mallorca - Bank Repossessions
The Mallorca Mortgage Business
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A recent article in the Spanish daily ‘El Mundo’ highlighted the increasing lengths Spanish mortgage lenders are going to avoid repossessing properties and being left holding a portfolio of assets of diminishing value. Options offered by banks include repayment holidays, refinancing deals at 125% loan to value ratios (LTV) and even converting mortgages into rental contracts.
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On top of this is the array of statistics regarding the risk exposure faced by banks in Spain with their enormous retail lending portfolios which help explain the reluctance of Spanish banks to lend save for the very best of clients. Nearly 1 million households are said to be having difficulty paying the mortgage, and 500,000 of them are already in arrears on their payments. Home repossessions rose by 600% last year. Furthermore one of Spain's biggest banks, the Banco Sabadell (owner of Solbank on the Costas) has 30,000 clients that have missed at least one mortgage repayment.
If one considers the massive increase in Spanish unemployment it is easy to see that this could well be just the start of the problem of bad debts and repossessions for the banks. With plummeting property values and the spectre of negative equity making an appearance for the first time for a generation of Spanish households, banks will want to continue to find new ways to support clients and avoid being left with the holding costs associated with an increasing portfolio of repossessed properties.
For further information on Mallorca Mortgages please see www.mortgagesinmallorca.com
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