12/01/2015 – El Economista
Spanish banks’ race for capturing clients has caused the loan prices to plummet in the last four years. The annual percentage rate (APR) for new mortgages stood at 2.859%, at 4.399% for SMEs and at 2.396% for over-a-million companies in November.
We should take a look back at the December 2010 figures to find lower rates. High competitiveness has pushed banks to reduce their interests by 0.50% since January 2014, and by 1.148% in the particular case of SMEs. With the rates hitting the bottom, the entities have to focus on loan volume to obtain profits.
The armistice imposed by Spain’s Central Bank allowed the entities to save up to €8.1 billion from January to September, equivalent to 27.03% of the financial costs.
Once deposits hit the rock-bottom, the savings scheme will have to be shifted upon credits, experts say.
The only vetoed destiny for the liquidity is the real estate world. And still, it has become the battlefield for the credit war. On Thursday, Kutxabank blew the market with a mortgage offer with 1% spread over the Euribor which took the first place in the current ‘cheap loan for house purchase’ ranking. Banco Santander and ING Direct position just behind it with their 1.69% spread. Farther on we find BBVA and Popular (1.80%), Sabadell (1.70%) and other entities like Liberbank (1.54%). Only a year ago, common spreads were of 2.5%, or even 3%.
In absolute terms, the prices are painfully low as the benchmark, the Euribor, also posts record-low. In November, it showed 0.335%, meaning an average spread of 2.524%. To compare, during the real estate boom 0.5% (or even 0.25% for best customers) spreads were no novelty.
Precisely, present offer is addressed to customers earning at least 1.000 to 2.500 euros and it involves all types of loyalty products (insurances, pension schemes, minimum credit/debit card spending). There is still some margin to fight with, both in loan prices and conditions, but relaxing them even more would mean higher risk and rejecting certain profits, while the industry faces the challenge of raising them instead.
Original story: El Economista (by E. Contreras)
Translation: AURA REE