26 | FUNDING ANALYSIS WORDS |OMF & Moneycorp
BUSINESS
www.opp.org.uk | JANUARY 2012
Finance data analysis
In OPP’s regular monthly look at what is happening in the international mortgage, funding and fi nancial markets, our expert partners Moneycorp and Overseas Mortgage Finder discuss the news that mortgage tax relief is suddenly on the agenda of the incoming Spanish government and of the outgoing American administration, where cheaper options are emerging. And, as always, the euro currency crisis rumbles on.
January highlights
• Euro zone update • Mortgage tax relief put forward by new Spanish government • Cheaper mortgage fi nance now available in the USA
Although there is still much uncertainty surrounding the euro zone as we head into 2012, there have been a number of positive developments over recent weeks that have fuelled a sense of optimism. With two new political leaders now at the helm in Greece and Italy, there appears to be a more serious and structured approach to each country reducing its own sovereign debt levels. And a tougher line has been
adopted by the EU commission, led by Angela Merkel and Nicolas Sarkozy, where there is new hope for a €500bn bailout facility, called
the European Stability Mechanism. This will run alongside the existing €440bn bailout fund. With more freely available
funds at more favourable rates, the banks are going to be in a much stronger position to start lending to businesses and individuals again - through loans and mortgages. Yields on government bonds
worldwide (used to facilitate government borrowing) have already started to fall in anticipation of new liquidity coming to the market, which has helped countries such as Italy to move away from the
Top 10 Countries By Enquiries Country & Position
1 Spain 2 USA
3 France 4 Ireland 5 Italy
6 Portugal 7 Cyprus
8 Caribbean 9 Poland
10 Australia Mortgage Enquiries
17.12% 16.43% 8.90% 6.84% 6.16% 5.47% 4.79% 4.10% 3.42% 2.73%
Monthly chart change
1 1 2 4 2 2 3 2 4
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sort of 7% interest rate borrowing levels deemed by many analysts as unsustainable. Yet, despite this growing opportunism, many banks have recently been encouraged to build up their cash reserves in case a second global credit crunch does hit the market, which depending on the lending institution concerned, may have an impact on the mortgages they offer.
Whilst most banks have recently
left their mortgage rates unchanged, we have witnessed some lender’s increasing their mortgage rates for foreign property buyers in Portugal, Italy and France by up to 1%. However, we hope that current efforts being made by the ECB to cut interest rates - and bring Europe more into line with comparative base rates set in the UK (0.5%) and the USA (0.25%) - will help keep mortgages rates low for foreign property investors in Europe.
Amongst the plans put forward by the newly elected Spanish conservative party Partido Popular was the proposed re-introduction of mortgage tax relief. The policy will sit alongside a number of other proposals put forward by the new government to help stimulate the Spanish housing market.
Other actions put forward by the government include extending the reduced VAT rate on new homes throughout 2012 and involving the private sector in helping the banks offl oad their repossessed housing stock in places like Spain ... freeing up credit for new mortgages. Currently, mortgages are generally available at up to 70% loan to value at interest rates from 3.25% for foreign citizens buying in Spain.
And although the details behind these plans are yet to be revealed, they are likely to be welcomed by both new and existing foreign property owners. And a recent report by Goldman Sachs
Top 10 Countries By Lowest Interest Rate Country & Position
1 Hong Kong 2 Australian - Singapore - Canada - France
3 United Kingdom 4 Portugal 5 Spain 6 Malta 7 Italy
Initial Interest Rate
1.85% 2.09% 2.09% 2.09% 2.09% 3.19% 3.22% 3.25% 3.28% 3.80%
Monthly chart change
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