Many loan applicants who are either considering making an application for a mortgage in Spain or are currently applying may be wondering what impact the Brexit vote has had.
At present none of the Spanish Banks have specifically changed their standard terms and conditions and the chances that officially they will do that in the immediate future is remote.
The UK market is important one for the lenders in Spain, forming the bulk of their non resident lending and at a time when they are looking to increase lending anything that puts borrowers off applying before impact can be considered properly is unlikely.
The commercial department within the Banks will want to keep the status quo for as long as possible and it is also the case that most lenders in Spain like the rest of the world had a though that a remain vote would be the outcome.
Risk assessment in Spain
The risks teams within the Banks may however take a slightly different view. Their job is to protect the Bank against the potential outcome on defaults of the leave vote. The risk teams will be more cautious when granting loans due to the many unknown quantities on the UK economy, in terms of jobs, legislation changes and the affect on sterling.
We can expect to see risk teams turn down the more border-line applications and or restrict more heavily the loan to value, loan size and in some cases pricing.
This means that whilst we may not see immediate wholesale changes, the risk teams may start to look at applications in the same way as they currently do for non EU nationals applying. Flexibility on underwriting and loan to values are more heavily scrutinized for those outside of the EU than those in it, for a number of reasons.
Affect of a drop in Sterling
Due to the drop in sterling it may make sense for the short to medium term for potential buyers to take a loan in Spain even if they have the cash to minimize the impact on total cost of the pound buying less euros. This will have to be balanced against the longer term objectives of the applicant and their view of what the future will hold for the UK economy, currency exchange rates and their own individual prospect.