The current banking scenario is marked by a long period of minimum interest rates that, according to the Bank of Spain, could last five more years and by the pressure of the European Central Bank for entities to circulate excess liquidity.
This situation does not seem to benefit banks much, so they may be looking for alternatives that help them improve their profitability . The comparator of financial products Good Finance warns that some of these behaviors that are being carried out would be the granting of 100 mortgages undercover .
100 Mortgages, a product only for the best profiles
Currently, mortgage offers with 100% financing seem to have been extinguished. If we analyze the publicity of the banks we will no longer find that it is openly announced that there is the possibility of financing the entire house. And, in theory, doing so is increasingly difficult. Only those customers who can demonstrate an economic solvency well above the average should access them.
On the other hand, a few years ago it was common for banks to grant up to 100% of a home through a mortgage for real estate owned. However, these offers have been extinguished and now finding a mortgage for 100% bank floors is a rather complicated task.
The bank wants to lend more money
Few are the banks that openly announce that they grant more than 80% of the price of a home. However, this does not mean they stopped doing it. One of the ways to give more financing is to grant the percentage of the highest value between the price of the house and that of the appraisal , while the most common formula is to give 80% of the lowest of the two.
On the other hand, from the comparator they explain that there are some banks that could be inflating the valuations , to lend more money. For example, if a property costs 100,000 euros, instead of granting the corresponding 80,000, they would charge it for 120,000 euros to give almost 100% of its value.
The concession of high-risk mortgages increases
The response of the entities to the pressures of the European Central Bank to circulate excess liquidity has been to open the tap to high-risk mortgages, which finance more than 80% of the price of housing. According to data from the Bank of Spain, 100 mortgages accounted for 15.6% of the total granted in the last quarter of 2015, a figure that increased 2.4% compared to the first quarter of the same year.
The Bank of Spain’s concern could be understood if the evolution of the average Spanish salary and the average capital lent by mortgages is analyzed. While the former has barely increased by 1% in recent years, both the number of mortgages and the initial capital has grown by 30% and 3.6% respectively during the last year, according to the National Statistics Institute.