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Mortgage blow for Spanish property buyers
Spanish bank Banesto, part of the Santander group, has recently taken the step to withdraw its non-resident mortgage lending service on Spanish property, writes Jo-ann Hodgson.
Following the withdrawal, the only product Banesto will now offer to foreign applicants is a self-certification loan which will be administered on behalf of GMAC.
This news comes just weeks after Caja Mediterraneo (CAM Bank), one of the largest providers of non-resident mortgages in the Spanish property market, instructed some of its branches to accept no further non-resident mortgage applications for the time being following a spate of false mortgage applications.
"This is clearly a case of once-bitten-twice-shy for Banesto," said Heather Chambers, Director of International Mortgage Solutions Ltd (IMS). "It is sad that due to certain unscrupulous brokers supplying false paperwork to the banks in order to push through an application so they can earn their commission, the ethical Spanish property buying public has to suffer. However, we must applaud this action as it should serve to prevent and dissuade both clients and the brokers involved repeating such practices in the future."
Chambers continued, "The Spanish banks are tightening up and at IMS we have noticed how pedantic they have become about documentation provided, and quite rightly so. Lenders will also now check liabilities and credit files back in the applicant's country of residence, something that didn't take place previously. The climate is certainly changing and those practitioners operating on the wrong side of the law will have to clean up or close down."
Nick Leach, Head of Business Development at Pierre & Vacances, added: "Banesto is clearly wanting to minimise its exposure to any further risk in the cooling Spanish property market, having leant to many overseas buyers in the previous booming decade, and this seems a sensible measure. Other banks are continuing to lend to non-residents, though perhaps at reduced loan to value or with slightly stricter criteria as there are clearly still many excellent clients buying quality properties and some supported with rental guarantees. In this market it is the poor quality properties and over-stretched clients who present the risk to the banks."
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Related article:
Advice on overseas mortgages
Article first published 30 August 2007