Bank financing has stagnated and the investment figures that we have experienced in previous years will no longer be recovered. Now is the time for promoters to go out and find their own resources. However, before talking about the solutions that are presented, which are many and exciting, we want to analyze the difficulties that we face.
Housing developers are increasingly finding it difficult for banks to grant them financing for real estate projects. Banks are increasingly demanding tougher conditions and this situation has left no other option but to resort to alternative financing. We present below the main reasons why there are so many difficulties in obtaining financing:
- The mortgage law no longer ensures the subrogation of the mortgage, therefore, it loses attractiveness for the banking sector to give a 2-year mortgage loan assuming high risk.
- The interest rate, that is, the margins they receive for this type of product, are small. The focus of interest of the banking entities is diverted towards the granting of another type of loan that offers a greater benefit.
- Now, financial entities are obliged to provision more for residential development with the new IFRS accounting standards
- The last point refers to the bank restructuring process in which the Spanish sector is immersed. We are living a process of bank concentration, that is, less competition and fewer providers of capital. We have experienced it recently with the latest merger between Caixabank and Bankia. This directly affects the promoters' access to bank financing.
For us, these are the 4 main points that summarize and explain why bank financing has stopped. In our series on the problems of access to financing for promoters we explain what solution exists to avoid the lack of financing.
Here are links to the complete # CápsulaIRM series so that you do not miss any step on the way to create your investment club:
- What difficulties do developers find in accessing bank financing?
- Retail investment, a blue ocean yet to be exploited
- Alternative financing, the solution to boost the real estate sector
- The investor club: the best tool for promoters to get investment
Why create your own investment club
How to create your investment club