Pressures on Spain’s financial system

September 5, 2011 – 10:40 am

Spain's financial system under pressure.

Falling property values and rising numbers of foreclosures in Spain are among the factors putting pressure on the country’s financial system.

Speaking to Time World, Santiago Nino Becerra, an economist at the University of Ramon Llull, explained that Spain’s mortgage market is comparatively small compared to other nations, such as the US.

“With housing values dropping, the banks here simply can’t withstand those kinds of losses,” he stated.

Mr Nino Bercerra went on to add that because unemployment in Spain is continuing to rise, “when it comes to foreclosures, we’re going to see some unbearable statistics”.

Source: PropertyShowrooms

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Spain eases conditions for those with mortgage problems

July 21, 2011 – 2:46 pm

Spanish mortgages problems may be eased?

Spain will ease conditions for people who can’t pay their mortgages as floating interest rates rise and unemployment remains the highest in the European Union, the government said on Thursday.

Interior Minister Alfredo Perez Rubalcaba said the government will decree  a new and higher limit on the amount banks can legally deduct from the wages of a mortgage holder in default.

The government is contemplating other new rules to protect homeowners four years after a property bubble burst leaving many Spaniards stuck in homes worth much less than what they owe the bank.

“Indignados” or “indignant” protests around Spain in recent months have called on the government to address the plight of borrowers who can be evicted by the banks but still owe the entire amount of their mortgage even though the bank now owns their home.

Source: Reuters.com

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Spain’s economy is showing signs of recovery.

April 8, 2011 – 9:08 am

Spain’s central bank Governor Miguel Angel Fernandez Ordonez predicts the economy in Spain and Tenerife will improve

Despite the government’s best efforts, Spain’s economy is only giving signs of a very moderate recovery, and remains hindered by recent falling property prices. A significant rebound would only come with an upward movement in activity in the real estate sector which is still in its infancy.

In a welcome bout of openness, Spain’s central bank Governor Miguel Angel Fernandez Ordonez said Tuesday the reform of Spain’s savings banks, saddled with bad property loans like no other, should have taken place sooner.  The damage from Spain’s property problem  has left savings banks, which account for close to half of Spain’s banking business, unable to provide credit to the economy. That, combined with soaring unemployment tied to builders being left with nothing to build, has left Spain’s economy as key European underperformer. According to data released Tuesday, the purchase managers’ index for Spain’s services sector dipped back to negative territory in March, to 48.7, from 50.8 in February, indicating a decline in activity. That compares with a rise in the overall services PMI for the euro zone, to 57.2 from 56.8 in February.

Source: Wall Street Journal

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Data indicates price fall in Spain and Tenerife

February 10, 2011 – 2:15 pm

Prices may still have a way to go before they bottom out in Spain and Tenerife

Potential market investors might be interested to learn that Spanish property prices are set to decline. Will Needham, editor of Spanish Property Magazine, said: “The best data indicates that prices are still falling and will continue to do so throughout 2011.”

“The rate of decline appears to be falling, so those looking for the bottom of the market should probably continue to wait.” He added that the number of transactions in the Spanish property market look set to show a “modest improvement” as bargain properties are taken on.

However, investors might want to be aware that the high levels of unemployment, bank repossessions and other consequences of the financial crisis in Spain “are not going away”. The research follows the publication of a survey by sunshine.co.uk, which found that the country in which people feel safest overseas is Spain.

The problem for would be investors is just when is the bottom of the market? Do they wait too long and then invest on an upward curve? Certainly prices in Tenerife are excellent value now.

Source: Expatriate Health Care

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized, Weather | Tagged , , , , , , , , , , | Comments (0)

Spanish court upholds investors rights in failed property development deposits case

February 3, 2011 – 9:46 am

Spanish laws protect investors deposits for off plan property developments throughout Spain and Tenerife

A Spanish court has upheld the right of investors in a failed property development to have their deposits returned to them, after a local bank attempted to shirk their responsibilities under the country’s guarantee laws. 

The Caja Cantabria bank tried to claim that the guarantee period had ‘expired’ on an investor’s funds, after they paid a deposit off the plan on a property that was never built. Under Spanish law, developers can use an ‘aval bancario’, or bank guarantee, to protect buyers whilst the development and construction of the property is in progress. 

Whilst they obtain funds from their particular bank of choice to fund the property development, the bank holds all deposits in a separate safe account until construction is complete. If it doesn’t complete in a set amount of time, the deposit plus six per cent interest is returned to investors.

Despite Caja Cantabria’s attempts to implement a ‘small print’ to the terms of their guarantee, the court still upheld this national guarantee law, and stated the guarantee period could not expire whilst the investor still had no property to show for their funds. Although Spanish law is not based on precedents like that of the UK, this decision should still reassure off the plan buyers that their money is safe as long as they have a concrete bank guarantee issued to them. This applies not only to mainland Spain but the Islands, like Tenerife are also covered. Clearly this should boost investor confidence.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , , , , , , , | Comments (2)

Rough week for euro market after interest rate and bond concerns

January 18, 2011 – 11:55 am

A rough week for Euro market rates

A  degree of uncertainty over the results of the highly anticipated Portuguese bond auction saw the Euro trade cautiously in the early part of this week, Portugal has remained under the spotlight  recently as fear of contagion gripped markets over possible escalation in Europe’s ongoing sovereign debt problems.

The euro saw some marginal appreciation across most majors after speculation hit the market that the Swiss government may take action to temper the strength of the Swiss Franc versus the Euro and maintained the higher end of ranges with further speculation that the European Central Bank would be aggressively participating in the coming sovereign auctions. Portugal’s bond auction produced a successful result with the full €1.25bln being sold and the 10-yr yield average coming in lower than had been anticipated and thus meant a sustainable cost level for Portugal. Bond auctions from Spain and Italy followed that of Portugal just ahead of the European Central Bank rate decision. Both countries had successful auctions and like their Portuguese counterparts Spain’s bond yields also average lower and pushed the single currency higher.

The ECB kept interest rates unchanged at 1.0%, as expected, but surprised markets by changing the tone of its monetary policy stance to being a lot more hawkish. In his press conference ECB President Trichet warned of inflationary risk within the euro zone and stated the central bank was prepared to raise interest rates to ensure price stability. The governing Council saw evidence of short-term upward pressure to overall inflation and while medium-term pressure remained anchored risk to the upside had increased.

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Britons missing out on £101million each year on international money transfers

May 28, 2010 – 8:22 pm

Poor bank rates and high charges for foreign exchange transactions mean individuals need to be savvier when transferring money overseas. Research by Moneycorp reveals that Brits are potentially losing over £101m a year by not shopping around for the best deals when transferring money abroad. Furthermore, uncompetitive exchange rates and high bank charges are costing individuals a lot of money, despite a concerted effort by most to reduce their outgoings on luxury and even staple items.

Britons missing out on cash when they transfer money to and from Tenerife

Britons missing out on cash when they transfer money to and from Tenerife

David Kerns, Head of Personal Clients at Moneycorp, comments: “While many individuals are visiting comparison websites more frequently, checking voucher code sites and consulting online consumer forums before purchasing goods in order to save money, this mindset doesn’t seem to have extended to foreign exchange. As a result, individuals are missing out on a very large sum of money they could be saving, by transferring funds
overseas through a foreign exchange specialist rather than a bank. Not surprisingly, high street banks are cashing in as a result of this surprisingly apathetic approach.”

People buying or selling property overseas and people emigrating or repatriating will be particularly affected, though this issue will affect all Brits who are transferring money overseas. People who own additional properties abroad and make regular mortgage and/or utilities payments will also be badly affected, as every transfer is open to individual transfer charges, in addition to exchange rates.

Data from the UK’s number one property website, Rightmove Overseas, reveals that the average house price in the Costa del Sol in Spain is currently €369,860.68. With a deposit of 10% , using a high street bank rather than Moneycorp would cost an individual, on average, an extra  £558 on their deposit alone.

An individual who wants to transfer a lump sum of £100,000 to an account in Europe would lose out on an average of 1,690 by using their bank for the transfer into euros.

David Kerns concludes: “Despite the UK coming out of recession recently, individuals shouldn’t be lining the pockets of their bank managers and it’s in their best interest to maximise their investments. Prior to making any overseas payments, we always advocate that people shop around to get the best rates possible.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized | Tagged , , , , , , , , , , , , , , , | Comments (0)

Latest interest rates and mortgage news from Spain and the Islands

January 2, 2010 – 12:21 pm
The latest news from Spain and Tenerife's Euribor and mortgage situation

The latest news from Spain and Tenerife's Euribor and mortgage situation

Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell 1 % in November to a new record low of 1.231%. – Euribor has now fallen for 14 consecutive months, and is 72% lower than it was a year ago. – As a consequence of the latest reduction in Euribor, repayments on a typical annually-resetting mortgage (140,000 Euros, 25 years, Euribor +0.5%) will fall by around 240 Euros a month, or 2,800 Euros a year.  Economic analysts expect Euribor to stay around current low levels in the months to come. Both Jean Claude Trichet, President of the ECB and Miguel Ángel Fernández Ordóñez, Governor of the Bank of Spain, have said that current base rates are at the “appropriate level”.

The volume of new residential mortgages signed in September was 62,411, down 4.2% compared to the same month last year. In value terms new residential mortgages were down 16% to 7.3 billion Euros.  The good news is the decline in new mortgage lending has been bottoming out in the last few months. It fell 31% in June, 19% in July, 7% in August, and 4.% in September. If the trend continues new mortgage lending will soon be growing again year-on-year in volume terms. That will give some support to the housing market and if you have a good relationship with your estate agent, they will be able to point you in the right direction, particularly in Tenerife for the best deals available.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized | Tagged , , , , , , , , , , | Comments (0)

Sterling sellers can sell cheaper and still end up with the same money!

November 7, 2009 – 12:26 pm
A drop in sale price yet still the same Sterling to take back to the UK thanks to the exchange rate!

A drop in sale price yet still the same amount of sterling to take back to the UK thanks to the exchange rate!

The Spanish see that the property market has been abandoned by many UK buyers due to the poor strength of the pound. However, sterling sellers can sell at 20% below what the property was marketed at a year ago and still end up with the same amount of sterling to take back the UK with them.
Also,  the stock of B-money, which  comes out at this time for cash purchases will also support the economy for sometime, although it is foreseen that the recession will be sufficiently long in Spain and Tenerife as to draw out most of this ‘resource’. Maybe this is the Bank of Spain’s cunning plan to remove the alternative economy. Unfortunately, the raising of taxes may just encourage it even more.

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Bank repossessions in Spain and Tenerife

August 22, 2009 – 9:39 pm
Bank repossessions provide great bargains for those with cash in Tenerife

Bank repossessions provide great bargains for those with cash in Tenerife

There was an interesting  article this week in the Spanish daily ‘El Mundo’ about bank repossessions in Spain, and what the 10 biggest lenders are offering investors. It  pointed that Spain’s banks and savings banks – known as cajas – are now the country’s biggest real estate companies. “Nobody knows how many properties they own, not even the banks themselves,” one expert told El Mundo. Their stock of repossessions is growing fast, and is expected to keep on doing so. All thanks to foolish lending in the past.

Banks aren’t, or shouldn’t be, in the property business, so this is a big headache for them. To liquidate their growing stock of property banks start by classifying property as ‘A’ or ‘B’.

‘A’ is new build from developers who can’t repay their loans, good quality, in good condition, and easier to selld, in theory at least. This is reported to make up 70% of the stock the banks now hold. Banks are using their own property divisions – recently set up in most cases – and branch networks to sell this ‘A’ property, offering discounts and preferential financing terms.

‘B’ is made up of repossessions from home owners who can’t pay the mortgage. There are forecast to be 74,000 foreclosures this year, and banks already have 9 billion Euros of bad debts from private owners on books.

Once again if you have cash available then you can bag  great property bargains  in Spain and Tenerife.

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By Angela | Posted in Economy, General, Inspirational, Miscellaneous Articles, Property, Tenerife, Uncategorized | Tagged , , , , , , , , , , , , , , , , , | Comments (0)