There is a report that the EU is demanding that banks reduce the mortgage limit to 60% of valuation. Very sensible when the market is nearing its peak, but stifling when it’s at a low as now. Once again, there is a misunderstanding that one policy cannot be applied throughout the EU and especially not where the multitude of different property markets are concerned.
Prior to the crisis, the problem was that the banks were offering the highest mortgage % at the top of the market when they were awash with money and desperately seeking a place to invest it. There is danger of that happening again as the weight of money available in funds is huge and increasing every day.
When the market is at the bottom is when they should be offering the highest % as there is the least risk. As the market and prices increase, the % should be reduced as there is an increased risk of being near the peak of the market and when prices fall there becoming a negative equity situation.
Campbell D. Ferguson, FRICS, is a chartered surveyor in Spain.His company Survey Spain Network arranges valuations and surveys by RICS chartered surveyors anywhere in mainland Spain and the Balearic and Canary Islands, and Gibraltar. This includes valuations, building surveys, structural surveys, building inspections and investment and development appraisals.