Credit Crunch & Developers

If you are wanting to buy in Spain now or early 2009 there is no reason why you should not do so

Buying a re sale....just the same as UK...get a good price, transfer your money at the best rate and make sure that you get a good buy...and that you apply the same principles as you would in UK

Buying a Ready Now: all facilities must be complete or there is a guarrantee that they will be finished........always get a Habitation Licence before you complete....some say that even if you have all the cash get a small independant mortgage [ not builders] to make sure that everything is 100%  legal...banks will not give you a mortgage if it is not !

Off plan: still no real problem but:
No need to pay a reservation fee of say 3000 €..which may or may not be refundable
Go straight to the contract....no hurry today !

When you pay your deposit get your bank [ or insurance ] guarantee at the same time as you do a bank transfer of your money.......yes at the same time

Not normal in the past....I know...quickest I have had is 7 days

But there is no reason why it can not be at the same time.........just like UK....after all Santander is buying up UK banks and they know how it works here......infact for Spanish business transactions guarantees are given, when required , on payment!!!

Now this is important...make sure that the developer is OK...most professional agents make sure that this the situation for the properties they are selling

But, to be practical, in Spain, if you now get your BG at the same time as you pay your money there is no risk.....I'm told that Bank of Spain will make sure that Spanish Banks honour building BG

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Great post rowlandsbb
Best night,
Maria

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Meanwhile in the real world.

France says world on ‘edge of the abyss’

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TJ welcome back, haven't heard from you in a while.

I noticed another thread, No Doom and Gloom, can understand why, but unfortunately things are in bad shape everywhere! I've been following the credit crunch since the beginning and I think good that most people don't know how bad things are. The trillion dollar bail out bill in America isn't about rescuing Wall Street but preventing a panic and bank run. I don't say this lightly but America is on the verge of another great depression. I don't think it will happen as the powers that be (even an idiot like bush) won't let it happen. Instead what we will see is a long deep recession as the US and world economy de leverages it self.

OK all nice and everything but what does this mean in the real world?

Simple Credit is the life blood of a modern economy. Without credit things go bad fast, he's an example I saw in my inbox from the WSJ.

Car loans and leases are drying up as dealers, auto-finance companies

 

and other lenders are having trouble finding money to lend to car buyers

 "Mortgages were among the first consumer products to be hit by the credit-market freeze. Now car loans and leases are drying up as dealers, auto-finance companies and other lenders are having trouble finding money to lend to car buyers. The upshot: Those with less-than-stellar credit are getting shut out of loans, and even some so-called prime borrowers are having trouble getting financing."

                  and

"One piece of good news: With car sales plunging across the industry, you should be able to at least nab a good price. Overall, U.S. sales of light-duty cars and trucks were down 26.6% in September from a year earlier,"

What this means is very simple, you don't sell cars you don't make money, you don't make money you lay people off. You lose your job you then lose your house which adds more down pressure to the housing which feeds into more bank problems which feeds into fewer loans. Or here in Spain, fewer mortgages means fewer buyers which means lower prices.

As I said I believe we are the cusp of another great depression, credit has dried up to the point where companies can't function anymore. I personally believe the first act of the new president will be to nationalize and recapitalize the banks in America. By providing capital (ie tax dollars) to banks is the only way for the banking system to restart. Regardless America and by extension Canada and Europe are in for a long nasty recession.

Not the time to be buying a house anywhere.

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TJ you may want to check out http://www.rgemonitor.com/ for the latest in what's happening with the Credit Crunch, but then on the other hand after spending some time there you may want to bury your head in the sand, not pleasant reading.

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Spain seems very quiet on bank failures, etc. I find this hard to credit given problems elsewhere. Does anone know the true picture in spain?

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Rather surprisingly the large banks are in surprisngly good shape. This is due a major crisis about 10 years back, the Bank of Spain put in and has enforced strong rules. I know there is a blog post about it somewhere. (found this)

Who financed all those 125% LAIR loans is beyond me

http://www.eyeonspain.com/blogs/costaluz/631/time-for-central-bankers-to-take-spanish-lessons.aspx

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While Spanish banks generally are in good shape compared with other countries they do have their fair share of problems. Less prudent lenders have advanced purely based on value and ignored purchase price (most of them have been brought to book on this now by the BOS and unless someone is being extremely creative it can no longer be done based purely on value), a lot of the same institutions have also been less prudent on checking purchaser financial status in terms of existing liabilities and affordability not forgetting that a lot of them are also carrying "toxic debt" of their own having financed developers that are no longer making sales and thus are having their own problems meeting debt repayment schedules. As Rob says the BOS imposed controls to prevent them getting involved in the sort of problems incurred by Lehmans, Bear Sterns et al - I think maybe this was because they didnt understand the complex swaps and bond derivatives that were being created for the on sale of debt to other institutions - thus they probably decided to avoid the 3.30 at Kempton as they didnt know who was the potential winner!! Generally the Spanish appear to have a more conservative attitude to gambling than the US and the 51st State and decided to adopt a cautious approach - whether by luck or by judgment I dont know but on this particular angle it seems they got it right.

I wonder if the banking industry will learn from its own mistakes or whether we will see a repeat of this all over again in 15 years time when memories of this time of turmoil are a dim and distant memory. Indeed will there even be any banks left by then! I cant help wondering if they had been more conservative with bonuses to staff they would have had more money in the pot to weather the storm. They still would have had the opportunity to develop structured products for debt securitisation but perhaps less of a pot of gold in reward would have meant a little more prudence in the deals done. Still would have had increased profitability for sharholders but have had some put away for a rainy day - might even have only been a passing shower instead. 

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