Hardening to grant mortgages

Financial institutions have hardened in the last quarter the conditions under which grant mortgage loans for house purchases, according to the sample survey on Bank Loans broadcast today by the Bank of Spain. mainly the tightening of margins applied to claims of greater risk to the required guarantees and the relationship between the value of the loan and guarantee.

In addition, the introduction of products that allow a greater debt would be accompanied by some credit more expensive. For example, mortgages for 100% of the value of the acquisition, but for which the entity is covered by recruiting coverage by the excess of the loan over 80% of the value of the house, whose cost is passed on to the client.

The factors identified by authorities as explanatory of the hardening of the criteria for approval of new mortgage loans in these fifteen quarters, having to do almost exclusively with the outlook on the housing market and the expectations concerning economic activity in general .

Despite the tightening of criteria, the fact is that financial institutions have embarked on a war to attract customers. So, if the first was opened Ing Direct who started s with your mortgage to Euribor + 0.33%, and Uno-e has been fighting back with the cheapest mortgage market, to market a product to Euribor + 0.29%.

Written by Carlos Lopez on November 7, 2006 with 17 comments
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