Friday, May 01, 2009

Short Report on Spanish Banks

Rip off Merchants! Is that short enough?

Seriously last week I saw the ads for Deutsche Bank's mortgage rate at Euribor +0.27% Now this is a rather good rate so I went to talk with them. This actual offer may be valid for about a handful of people in Spain but you would have to jump through so many hoops that it really would be a major surprise if you got any mortgage through them at all not only the headline advertised rate.

I then went to BBVA. I asked for a friend about a personal loan to pay off a credit card and have a better interest rate. They quoted me 11-12% for a personal loan. Now Euribor is currently 1.8%. I understand that the interbank rate LIBOR stands between 4-4.5% and that there is not much liquidity at that rate so in order to borrow money to lend the banks need to offer a better rate but there is liquidity at 5%. Therefore offering 11-12% interest rate is profiteering ridiculously and taking advantage of their own customers. The usual rate on a personal loan in Spain is 3% above Euribor not 10% above.

Banco Santander on the other hand were very helpful and would expect to give mortgages to non residents at Euribor plus 1.2-1.5%. That is a great deal for new mortgages as it is below LIBOR. This means they are willing to take the risk on losing a little to start up with as the usual mortgage will make money for them over 25-30 years. The CAM also came up with decent rates as did Bancaja.

What does this tell us? You need to look around for any financial product at the moment because as long as you are a decent looking client incomewise then there is finance available.

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