Tuesday, June 23, 2009

Almost the final nail

A product update today from the Leeds Building Society, one of the lenders that has remained the most reliable in Spain throughout the credit crunch

Now it seems they have finally capitulated, and to a degree that is more pronounced than their rivals in Spain

The key changes are that:-

They will no longer offer interest-only mortgages in Spain

Maximum LTV´s for apartments will now be 50% (down from 65%)

Maximum age at the end of the term will now be 65, unless the clients can demonstrate affordability beyond this age

Income multiples have dropped, making it more difficult to qualify for the loans

This is grave news for clients with mortgages in Spain that were hoping to change to an interest-only loan.

Our clients in the past 9 months or so have almost exclusively been for remortgages, as people seek to lower their outgoings by paying interest-only on their holiday homes

Leeds were offering the highest % LTV in Spain for switching to interest only, and combined with falling valuations that will have scuppered lots of clients plans

The Leeds is a business of course and they have to look at the risks and protect their own interests. But how do we get out of the recession and get markets moving again when more people are stuck with higher rate repayment loans

How indeed are they hoping to sell any property in Spain when 50-60% seems to again have become the normal lending levels

It´s another move in the wrong direction just when we were hoping and needing some signs that things were settling down, and indeed some reports have started to filter into the media about the famous "green-shoots" of recovery

Thanks for reading

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