Banks in Spain Offer Pre-Crisis Terms on Mortgages

Published: 9th September 2013

According to a recent report published, Spain's leading bank are prepared to offer mortgage loans on the same terms prior to the financial crisis. This is an effort to try and sell the properties that were repossessed during the debt crisis.

The report said banks such as BBVA, Banco Santander and Caja Madrid are prepared to offer 100% mortgages over a period of 40 years, these are terms that were in place prior to the crisis. Bancaja, CAM and La Caixa which are savings banks are also offering 100% mortgages over 30 or 40 years

Figures produced by the Bank of Spain show loans exceeding 80% of the homes value account for approximately 11.9%. This represents a value in line with that of 2008 and around 50,000 of all mortgages grated.

Some analysts have said banking institutions appear to be under a lot of pressure as they are willing to provide loans that they would usually have problems selling on. They have done this to remove the direct exposure to homes on their balance sheet.

Spanish families who bought a home during the first quarter of the year spent around 27.3% of their annual gross income. According to the most recent figures published by the Banks of Spain this is one tenth less that the same period in 2010 and more than seven points less than in 2009. The Government appears to be phasing out tax incentives for the purchase of property on incomes lower than €17,707.20 gross per annum and progressively phasing them out up to a threshold of €24,107.20 gross per annum. The Banks of Spain has however reported that this measure will not affect those families who receive aid because while the average house hold income exceeds €24,107.20 the estimated respondent income is currently below €17,707.20 and only once the upper limit is reached the tax change would then have an effect on a family aid.

The Bank of Spain also reported that families who bought a home during the first quarter of the year would need 6.5 years of their gross annul income to pay for their property compared to 7.6 years needed between 2006 and 2007.

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