Two Tier Mortgage Market Holding by Spanish Property Market Recovery

01 May 2014

With the news that over 50% of all properties that were sold in the Malaga province in 2013 were sold to overseas property buyers the real question is when will the local market start to improve? According to Spanish Hot Properties Managing Director Nick Stuart this will happen once the Spanish Banks start to lend more positively especially to the local community. Not before this happens can the housing market really recover.

The international buyers in reality have saved the Spanish property market from the abyss of a total meltdown and with the majority of these buyers not needing finance has helped the market enormously injecting substantial cash and much need taxation revenue into the Spanish economy said Nick.

However the Spanish banks are not lending more than 70% of the purchase price meaning that any new buyer requiring finance needs at least 43% cash deposit which is very difficult to come up with in the current recession.  This is stopping the sales of housing that the international property buyers have no interest of buying and also causing a hindrance to those international buyers who need finance.  Also banks are applying strict underwriting rules that means that a lot of buyers who can afford to pay their mortgage are unable to get the credit they need to buy properties.

There are obvious exceptions to this and this relates to the overpriced properties that Spanish banks have on their books where they have been lending up to 100% plus costs to achieve the price they wanted to get for the property. This is clearly illustrated in certain developments where you can buy at 40% below the banks price but can’t get any finance and means you must be a cash buyer to take advantage of these opportunities said Nick.

So until the Spanish Banks start to lend more aggressively it looks like the international buyer will continue to shining light of the property market in Spain

If you would like advice or help in relation to finance when buying a property in Spain contact Spanish Hot Properties who would only be too happy to help.

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