NEW banking regulations will protect Spain-based home-owners from foreclosure or eviction but critics say they don’t go far enough. With social unrest in its cities, and under intense pressure from the EU, Spain has passed new measures which prevent banks from initiating foreclosures until the default reaches between three and five per cent of the credit.
That's a bold move for Spain, which has traditionally had some of the more lax mortgage regulations in Europe. But it still falls far short of the tighter regulations which lawyers and activists alike have campaigned for. In Germany for instance, the default band is between eight and ten per cent, granting property owners more leeway.
The EU Court of Justice in Luxembourg has also ruled that specific provisions should be introduced into all mortgage contracts when vulnerable parties, such as the unemployed, are involved. As yet, Spain has no such provisions.
Questions also remain over higher interest rates and more easily attained loans. Spanish banks are still getting accustomed to the new safety first regime that has defined the property market since the recovery began.
New players on the mortgage scene will also soon make an impact. The banks are now readying themselves to hand out billions in compensation over unfair mortgage terms. New online companies are looking to step in with tailor made mortgage offers far more flexible than previously available.