New mortgage product in Spain
2014 has seen a more aggressive stance from Spanish Banks for the acquisition of new loans within the nonresident mortgage market.
Whilst this is across the broad and we have seen a few new mortgage products being launched the Spanish Banks are focusing heavily on buyers from Northern Europe and Germany.
A number of Banks have launched a range of preferential terms and conditions for clients originating from Sweden, Norway, Finland, Denmark along with Belgian and German clients.
Why is this happening
In 2013 Deutsche Bank withdrew from lending to anyone who did not earn their incomes in Euros. This was in response to a number of arrears from other nationalities which the powers that be felt were enhanced by the issue of currency exchange fluctuations. This closed the door of the Bank to any clients from UK and other European clients who sat outside the Euro. Within a couple of months DB had however launched a currency switch alternative fro Swiss, Danish, Norwegian and Swedish clients so as not to close the door to the Northern Europeans. The product was and remains however overly complex.
For German mortgage applicants and other Euro based economies DB still lend at 50% loan to value. Margins above Euribor based on other linked products are as low as 2.95%.
Northern European mortgage clients
Other lenders are focusing on the Northern Europeans as their back book all be it on limited numbers suggest clients from these countries are less likely to default than other nationalities. Added to this is the fact that Scandinavians are currently prolific buyers in Spain due to high currency exchange rates and low prices and their economies are believed to be strong the Spanish Banks see them as lucrative and stable mortgagees.
Unheard of for many years one Spanish Bank has even increased the loan to value available to clients from Sweden, Denmark, Norway, Finland, Holland and Belgium from their standard 60% to 70%.
For the clients originating from Sweden, Norway and Denmark Finland and Switzerland the deal includes a big reduction in margins above Euribor that can be achieved by other nationalities and for Dutch and Belgium clients just an enhanced loan to value.
Has this increased borrowing options in Spain
Prior to these improvements Danish, Swedish and Norwegian clients have access to the Danish Bank NYKredit who lend in Spain. NYKredit fund the loans by way of Danish mortgage bonds but did offer up to 70% loan to value at very low margins above Euribor and with up to 10 years interest only.
Due to the very attractive terms NYKredit were always the first port of call for borrowers in Spain who originated from Scandinavia. NYKredit over the last few months have increased their margins and will also only look at loans above 80k with a preference they exceed 100k. The recent changes mean clients now have more flexibility and cost effective choice.
Rates as low as 2.5% above the 12 month Euribor are now available for clients who are Scandinavian or Swiss with loan to values up to 70% and for Dutch and Belgian clients from 3.3% above Euribor.
As the year progresses it can be hoped that changes for the better happen across all nationalities.