Bank repos worth 43pc less than original valuations

Bank repos in Spain have fallen in value by 43pc on average compared to their original mortgage valuations, according to new research by the rating agents Fitch, reported in the Spanish press.

Values have fallen by between 20pc and 58pc depending on the lender, location, and condition, and by 32pc on average since being repossessed. Fitch analysed more than 8,000 homes repossessed by Spanish lenders to reach these conclusions.

BBVA is the most aggressive bank when it comes to discounting the price of repossessed homes, and sells quicker than most as a result. BBVA discounts its repossessions by 58pc on average, compared to an industry average of 43pc, with an average time-to-sell of 11 months compared to an industry average of 13 months.

Santander, Spain’s biggest bank, discounts by 43pc and sells in 14 months on average.

Fitch also warn us not to expect the credit crunch to ease up next year, as Spanish banks are only lending to people who buy one of their properties.

More falls to come?

Banks will continue discounting their properties in 2012, if the new Government has its way, according to a recent article in the Spanish financial daily Expansion.

The Government believes that banks will have to discount their prices by another 20pc on average, to bring their property portfolios in line with market realities and gain credibility with financial markets.

In which case, it’s not unreasonable to expect property prices to fall further.

+ Check out BBVA’s repossession at the BBVA Vivienda website (Spanish)


SPI Member Comments

Thoughts on “Bank repos worth 43pc less than original valuations

  • Brian Rowlands says:

    But they also have to deal with generic bank guarantees which are a ‘known liability’ for many banks in Spain even though at present they are reluctant to fully accept the liability unless a court forces them to do so, which is now starting to be more frequent. Perhaps because more and more cases are coming before the courts!Not until this issue is cleared up will the ‘holiday home market’ in Spain have a decent chance to recover-I suppose it is up to the regulator, the Bank of Spain, to force the Spanish Banks to accept their legal liability in respect of generic bank guarantees

  • The price drop would be a welcome change, but then so would the Central Governments control over the regions. It is this lack of control that has allowed legally built homes to be demolished by corrupt and out-of-control local authorities.

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