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Mortgage News
Those who are having difficulties meeting their ever increasing monthly repayments will be happy to hear about a new law that has been passed and will shortly be implemented here in Spain.
You can increase the term of your mortgage thereby reducing payments.
There is a catch however, you can only take out a mortgage until the age of 70, therefore if you are 35 the maximum mortgage term would be 35 years.
If you are 45 the maximum term would be 25 and if you are 60 the maximum term would be 10 years.
According to Antonio Argandoña, professor of economics at the Navarra University IESE Business School as reported in the Christian Science Monitor, these measures will only have a limited effect. “Extending mortgage terms may help families who already have loans, but it’s going to impede access to new credit, since the banks aren’t going to be as interested.”
Most Spaniards have variable interest loans at low prices, with the average loan at EURIBOR + 0,76%, between 1% - 3% lower than what most would pay with a fixed-rate mortgage. In fact, Spain has, I believe, the cheapest variable-rate home loans in the world. Unfortunately, individuals are far less prepared to take on interest rate risk than banks.
After 19 straight central bank EURIBOR increases, and interest rates back at 2001 levels, many who took out loans when interest rates were low are hurting. As their pain increases, loan defaults go up; at the same time, contractors slow home building, economic growth slows, people lose jobs. The economy adjusts, almost automatically; it's all part of the economic cycle.
Therefore, we can conclude that the correction will not be a quick one, going by past trends we see that euribor is reaching the peaks similar to 2000 – 2001 before the introduction of the euro.
If you can meet the tight lending criteria of the banks in Spain then you could be in the game for a real property opportunity.
When a door closes for one person a window of opportunity always opens for another.
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