(From OPP News)
Buyers in Spain could be able to secure 100% mortgages for the first time during the downturn thanks to a new developer-bank partnership.
Customers buying from UK-based developer Almanzora Group will be able to apply for 100% loan-to-value finance through the Bank of Andalusia on properties with discounts of up to 55% off peak price.
The developer has been selling around three properties per week since the start of the year and hopes the new mortgage offer will provide an extra boost to the market. The large discounts make the properties more affordable and so the bank can feel more confident about buyers’ ability to repay the loan, said Almanzora’s sales and marketing manager Simon Coaker.
“In some cases, the mortgage available is larger than the amount actually payable by the purchaser,” he said. “This is because, following last year’s price reductions, current prices of a number of properties are actually lower than the bank valuations.”
Bank incentives
Although the number of mortgages issued in Spain rose year-on-year for the first time in two years in November 2009, such high loan-to-value rates have become almost unheard of in Spain due to increased conservatism among lenders. However, banks are more likely to lend to customers buying repossessed properties or from developers backed by bank funding.
“There are some 85% loan-to-value loans available for bank-owned properties but generally there is still little movement in the market,” said Clare Nessling, operations director for international mortgage broker Conti.
Coaker told OPP that Almanzora was in partnership with the Bank of Andalusia to fund certain elements of its projects, but that the bank also wanted to take advantage of the sales opportunity.
“The banks have seen us doing well and are interested in dealing with our clients,” he said. “Some of our own mortgages are with the Bank of Andalusia but they have competed against other banks for our customers’ business.”
Addressing the long-term sustainability of such large price reductions, he said: “We wanted to create real interest in the property so have allied a mortgage product to selective discounts that will incentivise the market. But we think the 55% discounted stock will sell very quickly and we anticipate raising prices hopefully by mid-year.”
According to the official Spanish Estate Markets Index made by TINSA there was a fall of 9.7% compared with the same month in 2008, showing 0.7% more than the preceding month where they fell by 9%.
The value of home properties on the Mediterranean coast dropped 11.5% while the major towns showed a drop of 10.2% by the end of the first trimester. Below that 9.7% figure, the value of home properties in metropolitan areas fell 9.6%. Meanwhile in other towns the value fell by 8.9% while the drop was 8.3% in the Balearic and Canary Islands.
Focusing on the accumulated falls of each sub index peak, it is worth mentioning the Mediterranean coast with a fall of 16%, as well as metropolitan towns with a fall of 12.6% and large towns reaching 12.3%.
Telefonica S.A. has been once more elected for a period ending on 31st of December 2010 as the mandatory lender of the Universal Telephonic Service, defined as the set of services with a determined quality at a reasonable price, whose benefit is guaranteed as a right for all the end users of residential homes no matter their geographic location. These services include a connection to the public network from a fixed location. Telefónica’s obligatory services referred to above, must therefore grant anyone the following:
a) The ability to receive and make telephone calls of national and international scope to geographic and non geographic numbers.
b) To establish fax communications, at least of fax group III in accordance with the pertinent recommendations of series T of the UIT-T.
c) To establish data communications at a speed sufficient enough to access the internet in a functional form.
According to the law, Telefónica will have to satisfy each reasonable request for an initial connection to the fixed public network in a maximum term of 60 days from the date of request. In the case of not being able to make the mentioned provision in this term, except for force majeure or other causes attributable to the applicant, Telefónica will have to compensate the applicant automatically and it will exempt payment from a number of monthly payments equivalent to the amount of months or fraction of which this term has been surpassed.
( From Ministry Order ITC/3808/2008, de 23 de December).