REAL ESTATE

Despite the efforts of the financial stability of the European Union, it was clear that even before the ink had dried on the rescue Irish agree that the infection could be contained. Immediately started looking nervous investors to other countries in the euro area, such as Belgium, Italy, Portugal and Spain in particular, fear of the same problems that Ireland dragged to reappear elsewhere. After all, is the inability of the state to borrow (and Ireland is well funded in 2011), but the inability of Irish banks to refinance their loans in the wholesale markets that triggered the bail.

But the banks of Spain could face a similar problem? Today, Spain’s answer seems to be optimistic about the economy minister, Elena Salgado, told CNN that the euro zone’s fourth largest economy has “absolutely no need” for a rescue operation Irish style. It was followed by a very courageous statement that speculators short paris Snr Zapatero against Spain would “lose his shirt” and that the government has already done enough to avoid a debt crisis.

While this may seem like an admirable attempt to reassure and reassure the markets do not take into account the special circumstances that explain the current situation. Barclays Capital estimates that combined, the Spanish monarch and Spanish banks need to raise € 73bn in the first four months of 2011, about half of it in April 2011 only.

These numbers alone do not seem to point to the rescue of the territory, but if we take into account that the Spanish bond yields are at their highest level in 8 years, it is clear that more than words are needed to attract investors. The rate of increase in yields of 4% to 5.2% in one month is a radical change for the bond markets, which usually travel in small doses. This means that the bonds of Spain plunge in the value and the owners are worried that dumping will not be any money.

So what is scaring investors? The country has made great efforts to reduce central government spending and national debt this year will be 60% of GDP – is not great, but not as bad as about 100% in Ireland. But as Victor Mallet points in the Financial Times that there is a lack of clarity on the number, despite the “strict limitations” of the debt of the 17 regions (104.8 million) represent more than half of the public sector deficit, which makes it much harder for the central government to impose reforms. “Sovereign Risk Spanish is growing at sub-national,” says Nicholas Spiro Spiro Sovereign Strategy and several regions like Catalonia and Madrid have financial difficulties that recovery seems unlikely given the economic stagnation and slowdown growth forecasts Spain.

It is also in regions where the problems lie in the banking system. Spain has experienced a major housing bubble, accompanied by a huge increase in private sector debt and entered into recession when the bubble burst. But while big national banks like Santander are well capitalized (and even the possibility of acquiring foreign companies with problems) in the regions of boxes (regional savings banks) have accumulated significant exposure to construction and development. When the two large banks (BBVA and Santander) reduce 2006-07, banks have continued to provide more intensively, taking advantage of wholesale debt markets for funding. This alone makes them a higher risk. However, economies also provided half of the € 318 000 000 000 provided by developers in Spain. These loans now represent about one fifth of the fund assets, “said Santiago Lopez Diaz, an analyst at Credit Suisse. They deteriorate rapidly.

So now the boxes are without a doubt the darkest prospects for some time in what is already a highly volatile. The results of stress tests in early 2010 was supposed to have calmed the fears, but the investigation revealed that much of the liquidity banks was meant solely due to the overvaluation of much of its actions foreclosed homes. A recent survey by The Economist found that Spanish property is overvalued by 47.6%, suggesting that a sharp correction of the road.
Indeed the events of recent days have only made this more likely. The new accounting standards by the Bank of Spain will force lenders to dump assets are depreciated according to Bloomberg News. Under the amendments, banks must now provide for doubtful after only 12 months instead of the current 72 months, which is a big incentive for lenders to sell their home faster. The regulation also requires banks to value properties more realistic, giving them an incentive to sell.

Banks Seized Homes estimated that about 100,000 Bank owned properties currently on the market, but consider that this figure will rise to 300,000 next year. Obviously, this change of legislation to force banks to raise capital by selling its property assets, which would also boost domestic demand. The hope is that these revenues will negate the need to bail out big. However, the publication of this large stock of goods in the market price will drop dramatically and Fernando Rodríguez estate adviser based in Madrid, to RR de Acuna & Ass, predicts a fall of over 20% next year.

The danger here is that the stock assessment of property is the only thing that gives banks’ balance sheets any respectability. These assets have decreased by 20% and many are extremely vulnerable looking – and without the ability to borrow in the bond market nervous, the only solution is to ask European aid. So far the response from banks has been clearly Canute-like, arrogantly try to reverse the trend of falling prices using its market power to inflate prices artificially.

The method used by banks to have more than the price of open market and accepted as the standard of assessment for the evaluation of assets, begins with the shape of the banks to get rid of the houses that are being repossessed. Banks are using subsidized mortgages, which typically also include 100% mortgages, windows or without pay, for extended periods (even up to 50 years) and interest free options to attract buyers. These offers mortgages at a subsidized interest rate strongly disagree with the market rates offered for deposits. In general, these subsidized mortgage interest rates are offered at only 0.3-0.5% in the Euribor, while the deposit rate offered by financial institutions that currently around 4%.

The purpose of these mortgages are subsidized to encourage the purchase of the bank seized on assessments that are above current market prices. In fact, they are available only in combination with houses listed in the hands of the bank offering the mortgage, while private houses sold on the open market must apply through normal channels to normal mortgage rates, often 65% value, 25 years and the interest rate market.

Anecdotal examples show properties with mortgages subsidized between 25-40% over the free market price. In October 2010 in El Rosario, Marbella, a town of 2000m2, golf has been sold by CAM Bank had a sale price on their website 1.3 million euros, but they were actually seeking to offer 750,000 euros – but the final sale price is € 601 000 – a difference of 54%. Another example in Santa Maria Village, Elviria has been announced by a bank to € 269.500, but sold at € 188.400 – a difference of 31.1%.

In fact, valuations of property assets of the bank with the support of banks sales data extracted from their own houses, which are artificially inflated prices for subsidized mortgages. The result is a vicious circle, property values remain high, which in turn supports the approach the bank’s contractual payment provisions that require a low level.

However, with 1.4 million households to sell this response is woefully inadequate, in fact, many investors point to this practice as one of the main reasons is impossible to determine the real price of property in Spain from TODAY ‘hui – because official figures inflated so that the real price of Spanish property is not a reliable source. 2011 may be the year we finally found it.

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