DB in Spain
Following the general trend we have seen over the past few months Deutchse bank announced today that their Spanish Mortgage margins above Euribor for non-resident buyers has increased from a minimum of 1.25% above with linked products to 1.80% with linked products and as high as 2.60% above without linked products.
What are other lenders doing
How long it will be before the last lender at 1.25% Sol Bank hold this margin remains to be seen but we anticipate some movement upwards in the next few weeks.
This continuing trend is in danger of dampening mortgage demand. Foreign buyers have found it increasingly difficult to borrow at home by way of release of equity against their assets there as banks in other countries withdraw product for this type of loan at the same time as Spanish Mortgages become less and less attractive on rate.
Demand and growth of loans
We appear to be in a cycle of catch 22; demand being dampened resulting in no growth. No growth resulting in lower credit ratings for bank and Spain itself consequence of high cost if funds meaning increases in mortgage margins to make lending cost effective.