The end of 100% Spanish mortgage deals forecast

18:44 El NACHO 0 Comments

Spanish developers and their funding banks have been successful in selling off key ready apartments with a killer combination of hefty discounts and 100% mortgage offers... But now the banks are starting to withdraw their best Loan-to-value deals.

The 100% mortgage deals that have helped to revitalise the Spanish property market for the last year are coming to an end as the “Sold Out” signs go up on prime seaside developments in Costa Calida and Costa Blanca.

Whole blocks of completed apartments have been sold in the first six months of the year as troubled developers have slashed prices and their funding banks supported them with 100% loan to value mortgage deals in a dash for cash that attracted savvy buyers from Scandinavia, Benelux and Russia. Slow off the mark British and Irish buyers missed out on deals like 2-bed frontline apartments for EUR 108,000 with 100% low interest mortgages.

Offers have concentrated on developments with the best locations, best design, best specification and best prices – a winning combination that banks were willing to enhance with lower risk 100% LTV mortgage offers.

“Offering big discounts on key ready homes combined with100% mortgages has helped clear the clogged supply pipeline caused by the property collapse and world-wide recession and generated a massive new interest in the Spanish property market. Buyers often needed only EUR 20,000 in available cash to land a deal and cover all their buying costs and getting the place furnished,” said Ben Walker, sales manager for Spanish property specialists PropertyInSpain.Net.

But, he warned, the numbers of 100% mortgage deals have started to decline as developers and their funding banks move towards a more consolidated market place of increased buyers and fewer troubled developments. Although 100% mortgages have not been offered on individual Spanish bank repossessions or private sales, these market sectors have also benefited from the higher levels of interest in bargain property in Spain.

The mortgage deals on offer vary as the leading banks strive to comply with regulator, the Bank of Spain’s orders to reduce their toxic property assets and increase bank equity to safer levels. Most repossession property can still be bought with 80% or 90% mortgages, while private sales attract 60% to 70% advances.

Experts suggest would-be buyers should inspect a mix of bank-owned bargains and private sales when they book their Fly to Buy viewings as private offerings can be in top-class locations, better condition and come with all furniture and appliances – “Often all-round, better deals for buyers not needing a top-end LTV mortgage”.