In light of the circumstances currently affecting the world, we are keeping a close eye on government recommendations concerning Covid-19. All the Mortgage Direct Team are well, and we hope you and your families are too.
Fortunately, all our advisers work remotely and are well equipped to work as normal. As we offer a telephone and e-mail based service, we can continue to assist your clients as we have up until now. We operate a secure CRM database and server network that will allow us to access all relevant files with no disruption to service.
We appreciate that the lock-down in Spain announced over the weekend means people are unable to travel to or within Spain and estate agents are temporarily closing their doors. Although many property purchases will probably be put on hold for the time being, we have been informed by one of the largest banks in Spain this morning that some of the notaries are still open and completions are going through.
We will work remotely with our banking contacts to process applications already in the pipeline. If we can get these mortgages approved (subject to valuation), once the travel restrictions are lifted clients can continue with the valuation and purchase having the peace of mind the mortgage has been approved.
If you have clients interested in buying in Spain, we would still recommend they start the process now and get the finance in place before they look at properties. Having a mortgage offer when viewing properties makes the sales process much smoother for the buyer, the seller and the agent. One potential client sent us the following this morning which we totally agree with - "We are intending to buy in Javea, in Spain. We have found a number of villas that meet our criteria and will organise a visit to view them when travel restrictions due to Covid 19 have been lifted. We would like to get a mortgage in principle in the mean time and understand the repayments as well as the purchasing costs. Thank you."
Has our mortgage activity been affected?
Until now, no, although this could of course change as the situation develops. While a few clients have now put their purchases on hold (because they cannot travel to Spain), we are busier than ever with initial mortgage enquiries. Since the coronavirus was first reported in December 2019, we have seen a 16% increase in mortgage enquiry activity compared to the same period in the previous 12 months.
Have any of the banks stopped lending?
No. We have had notification from some of our contacts at the banks saying they are not going into the office and will work from home. Two of the large lending banks in Spain have indicated that some of their underwriters are working from home and that this may cause delays although they are still underwriting mortgage cases. Up until last week, the banks had still been attending the notaries and completing on property purchases although this will most likely change following the lock-down notice over the weekend.
Is there any change in interest rates?
No. Unlike the Bank of England reducing the bank rate by 50 basis points to 0.25% last week, at the time of writing, the European Central Bank (ECB) has not lowered its rate, despite market expectations of a cut. The ECB’s main rate remains at -0.5%, so borrowing is still extremely cheap to buy in Spain.
Some banks are still taking the negative Euribor into account (as opposed to “capping” it at zero) meaning some clients are paying less than 1% on their variable mortgages. This is an attractive deal to those buyers who wish to benefit from the current low rates and then redeem before the end of the term subject to low or zero redemption penalties.
For any mortgage-related enquiries, please don’t hesitate to get in contact
with Katherine by calling her on +34 695 706 749