Further to our previous reports (Oct 07) of banks tightening mortgage lending criteria there is now real evidence of banks significantly restricting lending and widening margins.
While earlier talk of tightening was more anecdotal the situation now is much more severe with many banks widening their interest rate margins - changes from 0.75% to 1.5% above Euribor (the reference rate for most Mallorca and Spanish mortgages) are not uncommon and, more significantly, some banks are actually closing their loan books, at least to new customers.
The next few weeks will be very telling for what we can expect from lending criteria looking forwards into 2008 with news awaited on Corporate results from the banking sector, and general liquidity in the market, both at the Mallorca and international levels.
While this is clearly unhelpful to a property market already adjusting to a period of very limited growth, most commentators feel that while 2008 will be harder, both in relation to the financial and property markets, the defencive qualities (relatively limited supply, restrictive planning policies, demand underpinned by lifestyle purchasers as opposed to speculative investors) of the Mallorca market should go a long way to ensuring any down turn should be quite moderate. Furthermore serious buyers with sizable deposits could in fact find interesting buying opportunities as vendor expectations become more realistic and banks look to quality rather than quantity on their loan books.
What is clearly even more important in the current climate is for buyers to look into their mortgage borrowing requirements, well in advance of commencing a property search, thereby establishing their budget and being in a stronger negotiating position once the appropriate property has been identified.
Should you wish to discuss your Mallorca mortgage requirements please contact The Mallorca Mortgage Business
Story supplied by Inversiones Novi SL
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