MARKET GONE MAD

YET ANOTHER INTERESTING DEVELOPMENT (NOT!!). ONE OF OUR LENDER PARTNERS HAS BEEN TO VISIT US THIS MORNING. ABOUT TWO YEARS AGO THEY INTRODUCED A CENTRAL UNDERWRITING DEPARTMENT TO ASSESS APPLICATIONS TO APPROVE A MORTGAGE FOR A CLIENT REMOVING THE RESPONSIBILITY FROM THE INDIVIDUAL BRANCH - IN AN EFFORT TO COUNTER POSSIBLE FRAUD AND HOPEFULLY TO INTRODUCE A BETTER OVERALL SERVICE - I.E. DEDICATED MORTGAGE PROCESSORS AND UNDERWRITERS. THE MORTGAGE WOULD THEN BE ALLOCATED TO THE BRANCH NEAREST THE PROPERTY BEING BOUGHT. WHAT IS NOW HAPPENING IS THAT BRANCH MANAGERS ARE SAYING THAT ONCE AN APPROVAL IS GRANTED BY THE UNDERWRITERS THEY WANT RIGHT OF VETO AS THE LOAN THEN BECOMES THEIR RESPONSIBILITY IF THE CLIENT DEFAULTS AND HAS A NEGATIVE IMPACT ON THEIR BONUSES ETC - THE BRANCHES ARE REVOLTING AND STATING THAT IF THEY DO NOT HAVE THIS RIGHT OF VETO THEN THEY WILL SIMPLY REFUSE TO SEND ANYONE TO THE NOTARY TO SIGN THE MORTGAGE DEED AND WILL SIMPLY REFUSE TO TAKE THE LOAN ON THE BRANCH BOOK. I AM NOT SURE THAT I CAN THINK OF ANY COUNTRY ANYWHERE IN THE WORLD OTHER THAN SPAIN WHERE THIS WOULD HAPPEN - OF COURSE THE ANSWER IS SIMPLE: THE LENDER SHOULD HAVE A CENTRALISED BAD DEBT BOOK BUT THEN THAT WOULD BE LOGICAL.

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Hey that would be logical!

Have you heard of anyone being refused a mortgage for those very reasons?

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Not as yet but that doesnt mean it hasnt happened and certainly the branch directors of this particular bank have formed a "co-operative" in order to try to twist the arm of the Board of Directors - think this is how things started in Russia in 1916 - hmmmmmmm - its the very typical ethos of a Spanish bank (and many other walks of life too) that there is safety in numbers and they are stronger as a group than as individuals. Many of the banks have a credit committee for approving mortgages for clients - that way if something goes wrong responsibility is diluted and the finger cannot be pointed at one individual.

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I'm so grateful that I'm not in the market for a mortgage these days!  It just seems to be going from bad (or should that be mad) to worse.

Must certainly be giving you some headaches these days, with everything going on!

Justin

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Always try to make the best mate to be honest. Keeping up to date with things though is sometimes a headache - used never to have to check a lenders criteria when making a recommendation - was just in my head and rarely any error. Now it is a case of trying to keep things in my head but at the same time have to check just to make sure that I havent forgotten something.

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Pat

lets face it , its one thing that its tough out there however the lenders dont do themselves any favours, the "criteria" seems to be changing on a daily basis!

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Agreed and no pre warning of changes - have just had to have a very unpleasant conversation with a client who we have had approval for on 4 properties - his situation is what can only be described as complex - we have had approval for 6 months and now that LFO is finally issued were trying to hurry things along to completion - managed to get 2 completed but 3 and 4 out of the question as the lenders have suddenly decided they no longer want non resident business. Then again the defaulters they are being hit by are tending to be non residents in the first place - as you know the Spanish have a very conservative attitude to their mortgage and would prefer to live on bread and water rather than miss a mortgage payment - hence I guess I can understand their justification for tightening criteria - however it would be nice to get a little advance warning rather than to be told when instructing valuation visit - this despite regular checks (within the last 7 days) of any impending changes to policy.

hey ho - all part of lifes rich tapestry and as my mother would say "character building" 

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We are having many of the same experiences :-

Lenders increasing margins in the credit crunch panic, so Euribor +1.25% being quite a typical rate, and hardly any rates below Euribor +1%

Loan-to-values being scaled back - 60% - 70% of the lower of price and valuation, much more common than 70-80% of a valuation that was often higher than the purchase price, a couple of years ago. Again, not many signs of these being increased.

So the falling Euribor looks like helping existing clients, depending on when their 12 month review is, but new clients are paying the penalties caused by the banks previous lending policies !

Many thanks 

 

 

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Speaking in plain English, is / are the spanish mortgage rates coming down for exsisting borrowers in Spain ?

 

Bob 13

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Bob

most brits who have a mortgage in Spain have an inital deal at libor plus x%, it is my opinion that yes the rates will come down however it does depend upon one,s own contract and which lender they are with and how that lender applies their rates ot the client.

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In response to yours Bob Euribor is coming down - the Annual Euribor is currently 4.12%, 3 monthly is 4% and EURO base rate is 3.25%. The IRPH is 6.04%.

It is impossible to answer your question without knowing which benchmark yopu are linked to. IRPH is not easing as quickly as Euribor but MOST borrowers tend to have a mortgage linked to one of the Euribor products (and generally an annual revision). If you rate has just been adjusted then you will be stuck with a higher rate for the next 12 months. Thus you see a great deal depends on when the anniversary of completion is.

Hopefully that has answered your question in as plain English as possible but without knowing more speficifics about your own situation it would be impossible to answer in more detail.

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Be aware that it is not just the anniversary of completion that needs to be taken into consideration.

We completed on 18th October 2007 & our mortgage review date is 1st November with the first new payment due on 1st of December. However, the Euribor rate that applies is actually the rate as at 1st September.

Therefore, while the mortgage hasn't gone up as much as I was anticipating, it could actually have come down if the euribor as at 1st November was applied.

I did query it with  the Bank & they said it is written in the deeds & so it was!

Never mind, hopefully the rates will keep coming down in time for next years review.

Noreen

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Depends on the lender Noreen and the rate that was applied on the original mortgage offer. If the offer was produced a couple of months prior to completion then that is the date that is applicable. Really depends on the lender and when the offer was issued. If an offer is issued well in advance of a completion date many lenders will revise the offer closer to completion date - some simply leave it as it was.

Lets hope youre right with the forecast for the next 12 months.

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Test post - please ignore

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