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This Month's Magazine

Property News November 2003

Mortgage business boosts Caja Madrid, Spanish families' borrowing debts reach historical levels, Mortgage averages and Revolving Mortgages

Mortgage business boosts Caja Madrid
Caja Madrid concluded its first nine month of the current year with a net profit of 470,4 million euros, an increase of 8,7% over the same period last year.
This is due to a turnover increase of 12% and in particular to the 24,4% increase of the company's mortgage lending.

Spanish families' borrowing debts reach historical levels.
Lending by banks and building societies has reached the 484.000 million euros and is growing at a rate of 13.7% a year.

Spanish families would seem to be more caught up in debt than they have ever been. The advice for caution issued by the authorities have not served their purpose nor indeed the warnings about the danger presented by short and medium term rate changes which can increase appreciably the repayments.
The property boom and the increase in prices, by some 80% over the last 5 years, are blamed for the unusual demand in mortgage borrowing. On the other hand, these factors are also the main contributors to the economic boom, the healthy employment figures, low interest rates and the return to 'bricks & mortar' investments.


Mortgage averages.
According to official figures, the average mortgage value figures recorded for last year are at around 77,7% of properties' value, compared to 65% in 1999.

Revolving Mortgages
More often than not, in addition to the costs of purchasing a home, there are other costs that one has to consider such as how to furnish the home, buying a needed car and even a holiday. Re-mortgaging or raising further borrowings against available equity was unheard of in Spain in the past, once you had arranged your mortgage finance for the purchase of a property, any additional borrowings for other purposes had to be granted under different terms and higher rates as a personal loan.

Things have changed and Spain has caught up with the rest of the world, now, with revolving mortgages, it is possible to re-borrow against mortgage capital repaid at better rates than personal loans, though it would seem that the only way to release any newly acquired equity value due to market changes is to re-mortgage. Perhaps some lenders may be willing to discuss this rather than lose a mortgage to another lender?

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