September 2013 ~ Manage Your Loan

Monday, September 30, 2013

Mortgage lending in Santander: pros and cons

If you want to find a mortgage loan can be found in the bank Santander is only necessary to consider one of the most characteristic as those cited below, detailing the advantages and disadvantages in all conditions of the entity.


In Santander bank or mortgage may be how are you numerous advantages :

    Documentation costs

First are the costs of documentation, which are very necessary for the creation of a credit on the purchase of homes and where you can enjoy very low costs for it and usually not exceeding € 2,000 ( to 29 July , 2011) .

    The interest rates as low

The low interest rates are one of the best ways to do this loan suitable entity , since they will make the payment in financing the purchase of a home comes less spending and providing greater economic use by the customer .

These can vary depending on the type of loan and the type of housing to be financed, but at between 2 percent and 4 percent interest .

    Terms of ease

There are other advantages too convenient for the customer such as the various outlets available to the greater ease of payment for their part, as well as some very useful options such as deferment or refinancing.

Among the many problems encountered are :

    The difficulty of acceptance

Guarantees are needed as other properties or payroll high paying job in order to find the acceptance of credit and financing enjoy .

    Compulsory insurance

With the creation of the mortgage is compulsory insurance contracts such as the life or home .

In these ways will have further known young mortgage Santander bank and all its conditions .

Cajamar : mortgages and loans that may be interesting

In Spain operate dozens of lenders , most of them with both physical presence on the Internet and it is difficult , when seeking a loan, opt for some . Therefore imposes some detail analysis , entity entity. This article discusses about a significant presence in the market, Cajamar : mortgages and loans that can be interesting.


Cajamar Caja Rural , Sociedad Cooperativa de Credito, known simply by his trademark Cajamar , is the sixteenth financial institution in the Spanish ranking .

Cajamar has assets totaling € 29.519 million , 52.128 million € of business managed , a solvency ratio of 13.6 percent , more than 5,400 employees and 1,027 offices in 39 provinces of 14 regions (so it can be said to have national ) .

His home is located in the Plaza de Barcelona , 5, 04006 , Almería , your phone is +34901511000 and website Cajamar.es
mortgage interest

Although the mortgage cajamar is standard ( its purpose is the acquisition of a home, the maximum loan is 80 % of the appraised market , the interest rate is variable reference in the Euribor plus a spread that can be lowered if hired other entity's products , etc. ) , offers another that can be considered interesting.

Mortgage is multipurpose , in addition to the standard mortgage terms , offering a sort of line of credit, in the sense that you can have back the amortized amount of the mortgage loan .

For example , if you originally borrowed € 150,000 and 20,000 were repaid , the borrower may require re 20,000, without a whole new application process that involves re risk analysis and presentation of collections .

In turn, this new loan can be used for any purpose . However, the interest rate , although still variable has a differential slightly larger than the initial loan (although the company does not announce exactly how much is the difference ) .
interesting Loans

One can also say that the loans granted Cajamar are basically similar to most types of loans that are managed in the market.

Highlights , however, that in the case of generic consumer loan , the customer can choose between a fixed rate or a variable. Other boxes usually set a single interest rate for such loans .

Within the so-called special loans , it should be mentioned that Cajamar grants to young entrepreneurs (aged 18 years and under 30 ), which funds up to 90 % of the investment made in fixed assets.

It is important to note that the box for this loan requires mortgage or staff ( guarantor ) .

Summarizing , we can say that Cajamar offers at least a couple of interesting financial products , which is worth considering , such as mortgage and loan purpose for young entrepreneurs.

Wednesday, September 25, 2013

Argentina 's economy on the brink of collapse

When the April 16 the Government of Cristina Fernandez de Kirchner expropriated the 51 % stake in YPF Repsol was controlled , Argentina CDS , which measure the risk of default of a country, rebounded to nearly 1000 points and played annual ceiling. The populist movement of the president of Argentina was totally counterproductive , and just as nationalization rumors CDS drove up almost 300 points, from 700 to 958 basis points.

Obviously , the nationalization of Argentina company dedicated to the exploration of oil fields in the country led to the establishment of a sense of legal uncertainty very harmful. In fact, the exploitation of the deposit of Vaca Muerta , which need substantial foreign investment so expensive extraction, could not yet start their activity by the lack of those investors.

But Argentina is not only legal uncertainty for companies , but also for its citizens. The public interventionism so wild that is making this country is taking them almost to ruin. The purpose of the call FX market was to establish greater control by the Treasury to contain capital flight . Result: prohibited the purchase of foreign currency by the Argentines used for savings and increased called black market where dollars were sold well above the official rate . In the end, the Argentines could not buy imported goods . Argentina President to the FX market does not exist, but the CDS are located and in 1489 points.

What's more , the New York Federal Court has ruled the obligation of Argentina to pay 1,330 million owed ​​to hedge funds that refused to restructure their portfolio Argentine bonds when the country went bankrupt in 2001 , further indicating that this payment must be made prior to payment of the bonds that did accept the restructuring , which could accelerate the default .

Meanwhile, Brufau , President of Repsol , is still waiting for compensation from the Argentine government ... Will there to collect it ?

What do banks do with my money ? That's how the fractional reserve

 The causes of the crisis in Spain is no longer a secret to anyone . The housing bubble , fueled by bank loans about low interest rates , caused the property prices rising beyond their market value and at one point the situation became so untenable that the bursting of the bubble with dire consequences were a fact .

But why credit bubbles occur , and therefore cycles? And if they have such dire consequences for the economy , why not stop in time? Many of these issues are explained by fractional reserve banking .
How does fractional reserve ?

Imagine that we have a free garage left a friend in need , and it begins to rent the moments others do not use it. We would not like it? Well that's what banks do with the money we put into it, because of the privileges that the state grants .

In reality , banks only have to keep a small part of the amount of money they have in deposits , called reserve ratio of 2%. That is, if we attend to the bank to deposit leave as 100 euros , the bank is only required to keep two . The rest of the money it can lend to others who , in turn , can admit you to a different bank , having to save the second only 2% of that amount , giving the rest to a different person and so on.

For example, when a person opens a deposit in a bank , call it Bank A, with 10,000 euros , the bank can pay 9,800 to another individual so that, for example, you can buy a car. At that time, the car salesman enter the money in another bank as deposit in bank B , which must observe only 2% of 9,800 euros , ie 9,640 euros. This process could continue and be repeated up to 50 times , having generated an amount of money of 500,000 euros with an effective base of only 10,000. This is what is known as banking multiplier .

But what if I go to withdraw all my money from the bank? actually be a single person withdrawing money the bank has no effect , because the reserve ratio of 2% is applied to the total deposits , so that, in principle , the money a customer will withdraw at any given time is available . The problem is when many customers flock en masse to withdraw their money , since in this case the bank would not have enough money to supply them all . This is precisely what happens in the movie Mary Poppins and her famous bank run .

However, banks have other tools to avoid this problem . The banks ( and I would highlight only the banks) may access financing from other banks , which is called interbank market or ultimately to the central bank. It is for this reason that the Central Bank is sometimes called lender of last resort , because they cover banks in case you do not have the enough money to have to refund to its customers.

But then, if the bank lends that money is because they do not have ? Not exactly . While it is true that the bank no longer has the physical money that his client deposited , the bank still has the money . The only thing the bank has done is make a note on their balance sheets accounting creating therefore virtual money. It is for this reason that only 10% or less of the cash available in notes and coins , and so the money is not gone , but it never really existed .

The fractional reserve credit bubbles generating

In a financial system in which savings are channeled into investment , customers would open deposits would yield them a certain interest for a while , giving up that money for a while that the bank used to pay investors who needed financing for their productive investments. Your profit would come from the difference between the interest that would be payable to the individual and the interests of your loan.

However, fractional reserve banking this link is broken completely . The ability to create money , and that , should you come wrongly made , will be an interbank market and ultimately a central bank that will cover the liquidity risks to which they have to face , make the bank managers do not have to worry about the solvency of their investments , paying virtually no risk. In these cases, when generating the credit bubble that we all be familiar .

The problem is when something is wrong and investments and loans made ​​more political than business criteria , begin to stop paid. The interbank market funding denied the bank ( the other banks stop offering liquidity for credit risk) , and the Central Bank , looking overwhelmed by what could be a chain demand all banks, forcing them to recapitalize and on occasion the nationalization . All serve to avoid a greater evil : the banking panic .

Therefore, fractional reserve banking is the main cause of the phenomenon known as cycle of boom and depression. When they discover the errors and excesses , it is fair when it happens the reverse of multiplication. Liquidation of investments and repayment of loans , increased delinquencies and loan losses , greater prudence of banks and the withdrawal of funds from depositors , reinvesting the previous expansion and causing the dreaded deflation.

Ultimately, the fractional reserve is the main cause of all these problems. I encourage readers to see the documentary fraud: the reason for the Great Recession , as well as one of the lectures of Professor Jesús Huerta de Soto about the financial crisis, or read his book Money, Bank Credit and Economic Cycles .

What will it involve the rescue for the Spanish economy ?

 It is now an open secret : the risk premium close to 500 points , access to funding by the Spanish state is impossible and Spain bailout is inevitable. For many euphemisms being used by the government ( financial, line of credit , etc) what will occur is a monetization of debt, ie a massive bond-buying by the European Central Bank .

But why now called rescue when there have been more times when the ECB has monetized debt ? What differentiate this eventual rescue with other massive purchases of bonds that have already been produced is conditionality , ie the obligation by the Kingdom of Spain to sign the famous memorandum of understanding that would set a series of conditions to be met by the Executive order to meet the deficit targets agreed with the European Union .
The MOU reads as follows:

    At the same time , Spain will have to fulfill their commitments and obligations under the Excessive Deficit Procedure ( EDP acronym ) and recommendations to address macroeconomic imbalances within the framework of the European Semester . Progress in meeting these obligations under the relevant procedures of the EU will be closely monitored in parallel with the regular review of the implementation of the program .

Which means that Spain will have to undertake even deeper structural reforms to achieve the desired setting . Also, will be supervised by a number of staff members responsible for ensuring strict compliance with the program (the famous black men ) . And what are the settings? Reducing costs and increasing revenues . That is, further public spending cuts and tax increases . And is likely to cut expenses are those relating to pensions and unemployment benefits , being those of a higher amount .

For the income, the tax increase will cause many businesses are forced to close down and many families have less disposable income , so consumption will continue to fall , which will slow even further growth our country and make it very difficult to tackle the significant debt maturities coming this October and November .

Mario Draghi said that the bailout will not be a " soft recovery " , but it is subject to strong conditionality , or as he defines " full economic conditionality " , unlike the last rescue FROB channeled through the banking, had no conditionality as such. Yes, the unlimited bond buying will reduce borrowing costs of countries with financial problems.

But: there is no other solution? Not really. The only viable option today to restore fiscal stability in Spain is the direct intervention of the ECB. So far, the massive purchases of bonds by the ECB have served to ease market tensions momentarily. But so far have not served absolutely for any other purpose that has not been to gain time, because the costs have not been reduced by the amount desired . Accordingly , adjustments have not finished but it is going to keep happening .

Bad bank ? Paid by taxpayers ? No, thank you.

 It seems safe and the solution taken to fix the banking hole will be the creation of a bad bank , which were brainstorming some time as a possible solution that would take the Government . As a reminder , a bad bank is a society which would consolidate the toxic assets and problematic financial institutions have in their balances.Sin But in my opinion , this is not the best solution from the point of view of the taxpayer.

 The bad assets would be priced for above market value now , so that the state (and thus the taxpayer ) will have to absorb some of the losses , since now the book amount of these assets is overrated. Is this the solution?

It is still a mystery how which will articulate the bad bank , but it is almost certain that their legal form will be that of asset management company without banking license. This is an important nuance because, unlike other banks, will not be funded at the ECB official interest rate in effect at this time which stood at 0.75 %. This condition is signed on the memorandum of understanding of conditions to rescue the European Union to Spain . My interpretation of this is that the EU does not want to assume any cost sanitation as banking is concerned, more so when you consider that Spain is imminent rescue .

Therefore, the first question is obvious. With markets currently closed , what is going to get the money Spain to create a bad bank ? It is estimated that the cost of bad bank could become 100,000 million euros. In an economy as burdened as ours, the risk of the failure Spanish public finances is more than likely . Not to mention the uncertainty that the liquidity provided by the bad bank to commercial banks effectively serve to recapitalize the financial sector.

Second, are you going to get the liquidity provided to the real economy ? The function of this bad bank should provide liquidity to banks to boost credit, but it is unclear who will reach out to businesses , so in need of a revival in credit to keep their production structures.

Finally, the biggest question may be to what will happen to those assets once in possession of the public -owned bad bank . The assets remain in this state bad bank quarantine outside the banking system to keep it clean . One of the possible options could be selling them to investment funds or foreign banks (there are many Russian investors interested in acquiring real estate developments in our country) ; solution , should recover the amount of the sale would be the least unjust to the solutions from the point of view.

Creating the bad bank may be one of the solutions, but in any case could be presented differently. One of them could be the conversion of the debenture into shares. In this case , creditors become shareholders, thereby reducing the amount contributed by the state for recapitalization of banks , if not all . And in any case , we should establish accountability for those responsible for this mess not go scot-free. The bad bank is in any case a solution unfair.

ECB Is the solution to the serious problem of Spanish debt ?

 In recent months, Spain has had to finance in the market at an unaffordable rate for any state. With a risk premium shot , it seemed that the only solution was for the ECB to buy the sovereign debt of our country to relieve tension in the markets and , thus , allow some respite from the public accounts. The ECB has bought Spanish debt as bonds and has provided liquidity to banks at an interest rate that now stands at 0.75 % in order to allow companies to invest and thus cheap revive the economy but how can this be sustainable over time ?

The answer is yes , yet is not . Let me explain . The solution would be to eliminate much of the debt they have accumulated by countries and deleveraging of all households and businesses . The problem is that this is not easy or quick input and requires a process that can be ( and in fact is being ) very painful , because it requires both companies and the state cut spending wildly or disposing part of its assets in the market to increase liquidity and to respond to your creditors .

To deal with these situations , the ECB has instruments to channel funds to the treasury of the United and banks. Monetary policy in this regard is to increase the money supply ( " give the crank to make money " ) , lowering interest rates and injecting liquidity into the system . In a situation of serious debt problems this can be the solution if we see that there can be a certain level of inflation but, above all, if these funds are properly channeled into the real economy , which is not happening.

Furthermore, the ECB carried out these policies with the aim of easing the huge debt tensions with which they are having to deal all governments and thus gain valuable time to undertake the necessary reforms. The problem is that these settings are not being carried out as quickly as required now. Remember that countries like Italy have received a proportion of injections by the ECB and have already relaxed their tension on the markets being able to see if this country end adjustments even next year , the only difference with Spain has been making adjustments in the time required .

With the markets closed , the only viable option for Spain today will be the rescue. But the recovery will require a series of conditions and counterparties by the Community authorities (the famous black men ) that will make the adjustment is slow and painful but ultimately will pay off . Cleaning up the banks and reduce debt, especially private , must be priorities of the Government of Mariano Rajoy. Otherwise , the solution is overkill and we will have an increasingly poor population and political abuse victim . And although it says otherwise , this bailout will be paid by all taxpayers pocket .

To summarize and answer the question in the title of the article: the answer is yes, but because there is no alternative , even though I am totally against it.


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