While other lenders have withdrawn from the European market with many French Banks closing the doors to international clients, Spanish Banks doing the same and many international lenders like Lloyds and UCB either withdrawing totally or partially Ubiquitous Mortgages owned by Mark Foreman are out there with rates that appear unbeatable, are the same wherever you buy immaterial of underlying interest rates in that country, and rates that cannot be replicated by the major financial institutions.

Why Ubiquitous, who say they are the lender, would take a completely different view of the markets to other lenders and be able to finance the capital required to lend at rates well below the current cost of funds is not clear.

According to their website, which has been updated recently, they have the enormous sum of GBP 250k paid up share capital. This massive amount of capital obviously allows them to borrow on the open market at rates well below those of the largest Banks in world like Barclays whose Chief Exec earns more than that in a quarter.

Unless they have a banking license in all the countries they lend in it must be private lending and not covered by any banking regulation within the countries they operate in. Either way they are apparently able to sit outside the current liquidity requirements for all lenders, as having GBP £250k liquid cash would hardly allow you to lend anything if you were to fall within current balance sheet requirements stipulated by most central banks and regulators. Of course the balance sheet may have much more cash to cover risk but then if so why not mention it.

To insinuate on their web page a mortgage broker is unstable because they usually only have GBP 100 paid up share capital will not give comfort to any client who knows only too well there is a huge difference between being a service provider which a broker is and an apparent worldwide lender.

To even raise paid up share capital as an argument to use Ubiquitous seems ludicrous because of more concern to a client could be the fact they have admitted to such a small amount of paid up share capital.

The conclusion clients may come to is that they may not be the direct lender at all and are at best in fact an agent for another financial institution, who either has private investors who only want to earn just over 3% a year, or have a tranche of money from a lender who can buy funds very cheaply or have such a high level of liquid cash they can lend at rates that for other banks is unprofitable. If this is the case why say you are the lender as this is misleading.

Either way a sensible client would certainly want to see the type of legal document they would be asked to sign. Want to understand how this is covered legally in the country of purchase or equity release, how the money for monthly payments will be collected, and what could happen to interest rates in the future even if it appears to be a fixed rate for life so they can get their lawyer to check its validity before parting with any money. To request this is not unreasonable and the information should be readily available.

It would also appear that lending criteria is not always clear as interestingly in last couple of weeks one client has been told by Ubiquitous that they have a minimum loan size of € 150k (when the client only required 60k on a 300k purchase), whereas another client who was buying at 150k and needed 70% was not told there was any minimum.

A valuation fee for an automated valuation is required and often this valuation, according to various comments from previous clients on web, apparently comes in too low to allow lending.

It is a little strange that the client who only wanted 60k was told minimum loan of 150k requiring then a minimum valuation level of € 215k rather than minimum € 85k valuation that would be needed if he had the loan size he wanted. The more cynical client might say the minimum loan level quoted was to allow a get out on valuation as it could be difficult to substantiate not achieving 85k valuation on a purchase of € 300k even in today’s difficult times.

Automated valuations which apparently Ubiquitous can do in a variety of countries, even those where house price data per region is scant require no visit to the property and no way of substantiating it has actually been done. The fee however is as high as for a full formal visit form an authorized valuation company.

Valuation fees are quoted at GBP £239 and despite saying on website there are no application fees a registration fee of GBP £95 is also payable. This is GBP £334 for every client who has been told they are approved and is willing to hand the money over, with no guarantee of lending finally being given, and with little cost incurred by Ubiquitous who deal online email only. Perhaps it is little wonder they have GBP £250k paid up share capital.

Ubiquitous Mortgages is a post from: Spanish Mortgages Experts International Mortgage Solutions

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The downgrading of a number of Spanish Banks, Spain itself and the previous weeks downgrading of a number of UK Banks who lend in Spain has seen a very quick increase in margins across the board.

Even Banks like Barclays who missed the downgrades this time round have increased their variable non resident rate from 1.95% to 2.35%.

By far the biggest impact on the Spanish market of the downgrades as it relates to foreign buyers is Lloyds moving minimum margins from 1.5% to 3%. As the last interest only lender to gain 5 years interest only with Lloyds now costs a massive 3.80% above Euribor.

Changes are immediate with only full applications received in full by 21st October having the old rates held.

Against this backdrop the good news seems to be that for their own stock Spanish Banks are absorbing increases in costs.

Banco Popular will offer 0.25% above Euribor for first year followed by 0.50% and Sol Bank are offering 0.60%. With funding up to 100% available at such keen rates Bank owned property is looking good to offer on. Yearly interest costs from the normal 4% Sol Bank rate to their bank owned rate means for every 100k you borrow you save € 1.344 per year in interest payments.

Spanish Markets In Turmoil! is a post from: Spanish Mortgages Experts International Mortgage Solutions

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The increase for loans at 60% or below is only 0.15% with rates including life cover of 1.40% being offered the higher rate now only applies to loans between 60% to 70%.

Whilst maintaining their ability to take on 70% loans this is a clear indication that they intend to manage the portfolio of 70% loans by pricing techniques making the 70% less attractive.

This happened in the same week as one of the banks who are made up of two Cajas and intend to float launched a standard 70% product with pricing from 1.50%. The merged Caixa Nova and Caja Galicia have confirmed a new joint policy of up to 70% for non residents. All applications are agreed on a case by case basis and pricing will reflect the overall profile of the application at 70% with staring margins of 1.50% they will help fill the hole Sol Bank appear to have vacated.

Sol Bank increases rates and a new Spanish Bank adds 70% loans to their portfolio. is a post from: Spanish Mortgages Experts International Mortgage Solutions

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How long it will be before the last lender at 1.25% Sol Bank hold this margin remains to be seen but we anticipate some movement upwards in the next few weeks.

This continuing trend is in danger of dampening demand. Foreign buyers have found it increasingly difficult to borrow at home by way of release of equity against their assets there as banks in other countries withdraw product for this type of loan at the same time as Spanish Mortgages become less and less attractive on rate.

We appear to be in a cycle of catch 22; demand being dampened resulting in no growth. No growth resulting in lower credit ratings for bank and Spain itself consequence of high cost if funds meaning increases in mortgage margins to make lending cost effective.

Deutchse Bank Raises Mortgage Interest Rate to 1.8% Above Euribor is a post from: Spanish Mortgages Experts International Mortgage Solutions

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The rather optimistic view is at odds with what is happening to other banks and their view of the market.

It is difficult to see how arrears in Spain; particularly for a bank like Santander who lent predominately to the resident market; will actually drop over coming months.

Unemployment all be it predominately for the younger generation is at 21%. Most businesses particularly those in the financial sector expect to retrench rather than employ this year as mergers between Caja’s gather pace and look to list. They require cost savings to make these attractive to investors and the bulk of this will come from efficiencies and economies of scale. The firms looking to shed jobs this year will not affect those at the beginning of their careers but will affect the 40 plus in a way perhaps not seen in Spain before.

The people who will be affected by companies cost cuttings are those with mortgages and this year we will see more of these types of cuts than previous ones.

Euribor rates which hit an all time low last year and have shielded mortgagees for the last 12 months with overall rates of anything as low as 1.5% have steadily risen. This month for reviews and new loans the 12 month Euribor is 2.08%. Even if the loan was secured at a very low margin above this year most mortgagees will be hit by a minimum 1% increase in their rate. For a mortgage of 100k on a 25 year term this equates to an extra € 376 per month the household will have to find. 12 Euribor rates are expected to continue to climb so by end of year mortgage reviews we could see increases as high as 2% or more to overall rate.

Spain has no control over these rate rises so has to live with a stagnant economy and rising household costs.

Given this environment it is difficult to see the Botin’s predictions of a stabilising arrears book and improving property prices actually be realistic this year.

Most pundit would predict 2011 will continue to see arrears rising and prices in some areas continuing to fall as banks make efforts to clear the vast numbers of surplus stock.

Santander say Spanish Mortgage Arrears Will Fall is a post from: Spanish Mortgages Experts International Mortgage Solutions

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Price are expected to continue to fall and it is difficult to see in some areas prices bottoming out before the end of this year or next although in some areas demand remains reasonably high.

Banks will continue to be cautious about the granting of mortgages in a declining sales and price market so we expect no relaxation of criteria or enhancement of loan to values to happen during 2011.

Clients requiring above 60% to 70% will need to focus their searches on bank owned property.

There continues to be pressure on cost of funds for the bank and last month for the first month in many borrowing from the Central Bank by Spanish Banks increased as money markets contracted for them.

The price of funds is reflected in the mortgage pricing banks are offering.

Deutsche Bank increased their margin from 1.15% this month to 1.5% above Euribor. Lloyds did the same a couple of months ago.

Many banks have now removed the ability to take a mortgage without life cover at higher rates and instead insist life cover is taken full stop. This is to ensure profitability of lending. Many banks like Sol Bank, and La Caixa now add a lump sum life cover to loan to prevent the life cover being cancelled at a later date.

Barclays and Lloyds remain the only two banks with some products where life cover is not compulsory. The Spanish Banks still lack transparency in ensuring clients understand the linked products when quoting and it is not uncommon for brokers to forget to tell clients either.

No longer can headline rates be taken as the true cost and clients should always ask the question, is life cover required, and what would be the cost. For clients age 45 years and younger, life cover premiums are reasonable, but for client 45 years and older there is a very strong argument for taking a higher rate from one of the banks that does not have life cover than a lower rate with one that does. Finding all this out at Notary on day of signing rather than being clear beforehand may make it all too late to change and could put deposits at risk.

Spanish mortgages market update June 2011 is a post from: Spanish Mortgages Experts International Mortgage Solutions

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Post the ECB base rate increase and the continuing upward trend of Euribor rates with little relief in site for the cost of the funds for Spanish Banks Barclays recently increased margins above Euribors to a minimum of 1.75% on their variable rate.

The three year fixed rate rose to 4.25% and the full term fixed to 5.95%. The three year fix still looks relatively good value for money with expectations the 12 month Euribor will rise to 3% by end of 2011. With most banks charging from at the bottom end 1.15% above Euribor to the top end of 3.9% above Euribor a 4.25% fix followed by 1.3% above 12 month Euribor at end of fixed rate remains one of the better products on the market.

Barclays affordability criteria’s makes access very difficult, with one of the lowest debt to income ratios of 30% and the current requirement that the risk teams only assess 80% not 100% of after tax income means only a handful of high earners with little or no UK debt are likely to qualify.

Maximum loan to value 65%

Santander

Santander remains currently at 50% loan to value and with the highest margins above Euribor in the market. A whopping margin of 3.9% above 12 month Euribor with low loan to value means Santander have by default extracted themselves from the lending market for non residents in Spain

Spanish mortgages lender updates is a post from: Spanish Mortgages Experts International Mortgage Solutions

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Yesterday it was announced the recently announced (Forbes Magazine)  richest man in the world Carlos Slim has bought into La Caixa.

La Caixa should be one of the first savings bank to fully list and this endorsement will undoubtedly help the listing process and encourage other investor to buy the banks shares.

Finally some good news for Spanish Banks! is a post from: Spanish Mortgages Experts International Mortgage Solutions

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Lenders like Banco de Valencia regularly promoted their currency mortgages to Spanish Buyers as an alternative to taking a Euro loan. During the years of 2007 to 2010 when Euribor rates were climbing and loan rates hit their height of over 5% many clients were convinced a Japanese Yen rate was much a much better bet.

Many of these clients have now found they have a loan that is in size considerably more than the loan they first took out due to the exchange rate fluctuations. The loan is always in Euros and converted to Yen at completion and converted back to Euros from Yen if the loan is cleared early.

Because the Yen has strengthened against the Euro anyone wishing to clear the loan would have less Euros coming back when the conversion was done and therefore left with outstanding amount on the loan despite having a loan that has been paid up to date for the entire time it has been held. Any benefit on rate has been completely wiped out. Clients therefore are tied into the loan and victims of exchange rate fluctuations requiring a reversal of the trend to reduce the capital outstanding on either sale or early repayment.

The Perils of Currency Mortgages When Taking a Loan in Spain is a post from: Spanish Mortgages Experts International Mortgage Solutions

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The official auction process in Spain is a very different process to those being touted on the web.

When a property is going through a repossession process the final part of this process; before the bank can take ownership; is that the official court auction takes place. This auction is only advertised on the Court Boards of the relevant and local court to the property.

Each Spanish property has on its deeds an auctionable amount recorded when the loan was originally granted. At court auction the property cannot be sold for lower than 70% of this defined amount. Bidders must put into court 30% of the current value of the property or they will not be able to attend.

If the property is not sold at auction then the bank takes ownership at 50% of the auctionable value and must pay transfer taxes etc relevant to this amount. The 50% value is then deducted from the amount owing to either pay off fully the outstanding Spanish mortgage or leave an amount outstanding that the mortgagee will be pursued for.

The Spanish Bank has 21 days before taking over property to find a buyer who will then buy direct from the courts. At this point the bank can agree to sell the property at any amount they wish but cannot if they choose to sell at a lower price pursue the original owner for any more money than was crystallized at day of Court Auction.

The Spanish Auctions advertised on the web are in fact private auctions where direct sellers can chose to advertise their property and try to sell it by a bidding process in comparison to perhaps using an Estate Agent or other marketing avenues. They are not however official auctions which in anyway form part of the normal repossession process in Spain and nor are they currently used by Spanish Banks to offload surplus stock.

Access to official Spanish Auctions is difficult to gain as many remain a closed shop but buying from the banks in the days in between auction and them taking full ownership is by far the timescale at which point the best price can be achieved.

Anyone genuinely believing that going to a private auction means they are getting true Spanish Bank auction stock will find this is far from the reality.

In the UK eventually bank owned stock not sold within a period of time via normal processes ends up at auction this is not the case in Spain. The auction process is the final part of the re-possession process not how the Spanish Banks sell the stock they have taken over.

Property Auctions In Spain is a post from: Spanish Mortgages Experts International Mortgage Solutions

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