Are the Spanish Banks Preparing to Break Ranks

Banks in Spain are a homogenous bunch usually. They don't compete too much on concession of mortgages although if you are a "good" client they might well give you maybe 0.25% less on your mortgage rate as long as you sign up for their insurance, credit cards etc... However the major complaint of mortgage holders in Spain is that if they fall into debt through no fault of their own then the bank can repossess and the return of the house does not guarantee the paying off of the outstanding debt, in fact until last week they could adjudicate the property to themselves at 50% of last valuation leaving you still owing the outstanding amount and without a home (that has now changed to 60%) Bankinter has broken ranks though with its new mortgage offering. For the purchase of the principal home, not a holiday home or second home, they are offering a mortgage that if you return the keys to the bank at any time during the mortgage period you are guaranteed to clear your debt even if the value has plummeted. The maximum amount loaned is 80% of valuation or cost price whichever is lower, and they will finance for periods of up to 40 years. It remains to be seen who will be able to get these mortgages, currently it would seem you will need to be a good prospect for the bank of course, but if you don't have to jump through too many hoops it could be that Bankinter get a lot more clients for their mortgages as people will feel more secure with a mortgage that means if things go badly wrong they won't have a huge debt hanging over them for the rest of time. Because of their current policies Bankinter have the lowest rate of bad debts of any bank in Spain even though they used to promote the "multidivisa" mortgages where people's mortgage was often in Yen or Swiss Francs. They took a huge hit with the depreciation of those currencies. I will be giving Bankinter a visit next week to see if these mortgages are applicable to foreign residents of Spain. They should be as otherwise it would be discrimination on behalf of Bankinter but in Spain you never know. The bigger issue is that people in Spain through various pressure groups and with the support of some of the judiciary are pushing for "Dación en pago", handing the keys back to the bank and clearing the debt as an option for people currently being made homeless by repossessions. The movement is getting some action and even has a little political support but it is unlikely to become law or retrospective. A move like this from Bankinter may suggest a chink of hope for some of those affected.