The figures are not the only ones that announce something. And, on this occasion, the message launched is for the good of the real economy, which citizens perceive. The banks have returned to hang in their windows offers on mortgage loans. The bet does not seem eventual. Some executives of the Spanish financial sector have given to understand a few days ago that will have continuity. “For the first time since the beginning of the crisis, the credit will rise in 2014 “. “We foresee an improvement, an exit from the sluggishness in the financing of consumption “. The first state corresponds to Emilio Botín, president of Banco Santander, and the second to Juan María Nin, CEO of La Caixa. Both were made during the presentation of the results corresponding to the closing of the fiscal year of 2013.
Both Santander and La Caixa have been, together with other entities, who have launched the first offers in 2014 for the granting of mortgage loans. An unusual event in the last six years.
With the crisis, the bursting of the real estate bubble and the escalation of delinquency at historical heights, banks had closed the credit concession. Now, the offers return to the shop windows, with a reduction in interest rates in relation to the period in which it was very difficult to access financing for both individuals and companies.
One reason is the need for banks to maintain to your customers What are the reasons for this apparent change in trend? There are basically two. The first, and the most important is a stabilization of the economy. We are still in crisis, but several indicators suggest that the worst has happened. Second, the need for banks to expand and maintain their customer base in the face of the loss of attractiveness of some star products such as deposits, which have traditionally been the preferred investment option by small savers.
The drastic fall in the yields of deposits is causing the massive flight of investors towards the search for alternatives. So the banks are slowly turning the tap on the mortgage loans.
But there is a remarkable difference to how they did it before the crisis. Now the financial entities demand that the candidate has a high solvency. In addition, in exchange for the concession, the beneficiary’s relationship with the entity will be very high. In years prior to the crisis, it was enough to have little more than direct debit to get a loan or credit.
With the start of 2014 new mortgage offers appeared with some spreads to the downside, some even below 2 %. The majority is referenced to the 12-month Euribor, the period in which the majority of housing loans are fixed, which in the month of January closed at 0.562 %. Experts predict that it will remain above these levels throughout the year. This is the first aspect to take into account when choosing a product or another between different financial entities.
The bank seeks primarily a solvent payer. For example, Santander’s new mortgage, which advertises under the slogan Finally, new Santander Mortgage, collects Euribor interest plus 1.99%, but in return requires direct payroll or social insurance – with a minimum income of 2,500 monthly euros-, nine quarterly receipts, the use of debit and credit card, with a minimum expenditure of 500 euros per quarter and home insurance, which will be free the first year. If these characteristics are not met, the interest rate would rise to Euribor plus 2.99%. On the other hand, and as for advantages, it eliminates opening and cancellation fees.
The conditions of Santander’s offer to the customer are similar to those that are now on the market. Most ask for the contracting of life insurance, home insurance, pension plan and the use of credit cards with a minimum consumption.
You have to weigh if they compensate the interests with the demands that they impose us Second aspect to take into account: we must weigh if they compensate the interests that they offer us in the mortgage with the requirements and requirements that the contract of connection with the bank includes.
What is also being noticed in these first months of the year is that specific products for young people are appearing. Kutxa maintains, together with the Government of La Rioja, a credit-granting program for clients between 18 and 40 years old who want to buy their first home. Among its main advantages is the interest rate, which adds only 0.95% to the Euribor to 12 months.
La Caixa is another of the entities with a specific offer at this time for young people: Hipoteca Zaragoza Joven, whose interest is Euribor plus 1.90%, and the beneficiary can have up to 35 years. Logically this product, like that of the Kutxa, is subject to the acquisition of housing within the corresponding community.
It is evident that we are witnessing a new era for mortgages. It started at the end of 2013 and with the beginning of the new year, the trend is consolidating. Again, banks are willing to lend money, to finance their customers, but not at any price. It is the beginning of a recovery, still very incipient, that can have great changes in the future. The terrain towards standardization will be long and arduous. Mortgage loans fell by 68% between 2008 and 2012, while those for consumption fell by 75% in the same period.
Protect the consumer
The European Union has just approved a directive on mortgages to avoid “irresponsible” lending. Each country now has a period of two years to adapt it to its own legislation. The regulatory framework reinforces the protection and rights of creditors and debtors. The information and transparency requirements will be higher and the option of giving in payment is contemplated.
How to contract a loan or a mortgage
PaydayNow Loan: The granting of credit, both mortgage and personal, requires an agreement between two parties: the bank and the client. For the contract, the amount, the term of the return and the interest will be taken into account.
Currently, the majority of consumer loans have an interest close to or greater than 10 %. Take into account: First, the interest rate. The offer is starting to grow and it is interesting to compare between entities. Mortgages are guaranteed with housing or real estate, so the rates are lower than personal loans. Also, take into account the real APR – sometimes you pay less the first year -, the commissions and the connection.
Benefits: Yes, there are. In mortgages, there is a reduction in the IRPF for investment in habitual residence. Some Autonomous Communities have complementary aids.
Non-payment: If you delay in the agreed payments, you will have to pay interest on late payment, higher than those agreed for the periodic installments. If the non-payment is prolonged, the bank can obtain the seizure of their assets through the courts. If there is a guarantor, it will be required that the guarantor be responsible for the payment.
More personal loans, but at a very high cost
The turning point that banks are having in granting mortgages extends to consumer loans. In the last months, the offers have been extended to different fields. The purchase of cars, motorcycles, studios is no longer just financed … It is also done to buy clothes!
From this year, Santander, through its subsidiary Santander Consumer, offers the owners of the Club Cortefiel card the possibility of subscribing a consumer credit for an amount of up to 12,000 euros, to be paid up to six years. The problem is that the interest is above 10 %.
The majority of the loans currently granted by consumer banks are close to or greater than 10%, and in certain cases, it is somewhat cheaper to manage it over the Internet. The offer of personal loans has grown significantly. Currently, La Caixa markets up to 13 different types of loans; Santander, six and Banco Popular and Bankia, four without distinction.