Valencia Property Blog

But without the bank agreeing it...

I had a very interesting conversation with a friend yesterday. We were talking about banks and Spanish mortgages, yes I know but I am that type of person, and they remarked that they were going to pay what they wanted to pay not want the bank wanted to pay. Sounds risky? Let's give you a bit of background.

The banks are now Spain's biggest estate agents, yes even bigger than me, having taken on repossessions, finished and unfinished developments and properties that they have had the keys handed back to them on.

Spain has an official unemployment rate of 20% and many of those unemployed have little or no income from benefits and are still liable to pay for a mortgage not having had insurance in case of unemployment. There are lots of people paying nothing which the banks are having to take through the process of repossession through a court system which is overloaded. My friend's interest rate is set at 5% when the Euribor rate is 1.2% or less and the bank are refusing to lower it even though there was an agreement made in the branch to reduce it. Central office refused to change it. Why? Because they are quite happy creaming off almost 4% on top of Euribor. Basically my friend has said that 2% is a reasonable rate in the current climate and that is what you are going to get. Will the bank act against them? I get the feeling they won't because they are paying the capital amount and the interest payment at 2% each month and the bank has bigger fish and problem to fry. Meanwhile, the extra interest is mounting on a monthly basis. We will wait to see what transpires. What do you think though? (By the way no clues in the post about who it is and who the bank is. I used they/them/their deliberately and haven't mentioned the bank name or used a picture of that bank. After all the bank might read this! Also nothing in this post constitues advice that you should be following. It is just a statement of fact. That's the disclaimer out of the way) Related Reading 1) 90% Finance and Nothing to Pay For Three Years 2) You Have To Be Quick These Days 3) May Podcast: A Walk Through Valencia