Unfortunately the economic crisis caused by COVID-19 has affected the mortgage sector in Mallorca, Menorca & Ibiza.
Although the Spanish banking sector assures that the granting of mortgages has not stopped, it recognizes that the number of applications has decreased.
Mortgage industry sources say that because of the current situation some consumers are postponing purchase decisions, which is impacting the number of mortgage applications. Housfy, the online property broker, says that the demand for loans for the purchase of the first home has been reduced between 30% and 50%, however, they clarify that these figures are distorted by an increased demand for subrogation.
Despite the current scenario, the sector insists that the application process for a mortgage can be carried out from start to finish. “The process can be completed perfectly. From making the application to the signature at the notary’s office”, according to sources.
However, some clients claim to have encountered obstacles in the mortgage process, especially regarding timing and appointments, with several consulted cases ending in postponement or difficulties in having an appraisal of their situation. An alternative to speed up the process would be to have the help of a financial intermediary to manage the whole process and thus reduce the chances of delay in the operation.
Adapt and overcome: a quarantine lesson
The more traditional banks have had no choice but to promote their online channels, although most of them already had telematic procedures enabled for requesting a mortgage. As a novelty, some meetings between the client and the bank have been done for the first time by video conference.
In any case, the reality is that online entities are one step ahead because they are already used to the digital environment. An example is MyInvestor, which follows the exact same procedure as before only that mortgage managers work from home, or ING, which ensures that their process remains the same.
As for the timing of binding offers, the banks are generally keeping to the agreed dates. However, some entities such as Abanca are reviewing them on a case-by-case basis and Cajamar sources acknowledge that they have already increased the term of the conditions of some mortgages, taking into account the personal circumstances of the applicant.
Notaries make their services more flexible
Some banks claim that the number of active professionals has been reduced since COVID-19 arrived in Mallorca, Menorca & Ibiza. Even so, they confirm that properties are still being appraised with “relative normality”. However, the professionals who go to the homes are obliged to follow the same very strict protocols of action found in other sectors.
As for appointments with the notary, during the first weeks of confinement many offices closed and decided to postpone the scheduled signatures that they did not consider urgent. However, at present, most of the banks assure that the mortgages can be signed. Although some warn that sometimes depends on the criteria of the notary and that it is necessary to request an appointment and justify why the operation can not be postponed.
Is this a good time to apply for funds?
Choosing to buy a home now or waiting for everything to return to normal in Mallorca, Menorca & Ibiza will depend on the preferences of each client. Either way, this might be a good time to start comparing mortgages and exploring the best offers.
When asked if the criteria for obtaining a mortgage has been tightened because of the current pandemic, most banks agree that they have not changed.
However, some financial intermediaries warn that although they have not seen changes in the risk criteria, they do perceive greater caution in the study of the profiles, above all for fear that the employment situation in the Balearics has been affected by the current crisis.
Should you require any assistance or legal counsel concerning properties, purchases and sales on the islands of Mallorca, Menorca and Ibiza, please contact us at your convenience at email@example.com or by phone on the numbers listed on our contact page.