Banco Santander is leading a shift in the business cycle that has started to become obvious in Spain. Yesterday in Congress, Luis de Guindos assured that home prices had bottomed out. In this sense, Santander is offering mortgage deals way below competitor prices.
The goal is to attract clients to this lending area, which is is starting to regenerate along with traditional business loans. Santander's new mortgages could apply to all types of residences, not just the properties that it owns. Until now the banks were reserving the best loan conditions for clients that chose to buy properties that wer part of their real estate portfolios. And that unspoken policy was a serious hurdle for builders, who were trying hard to reduce their inventory in a climate where loans and buyers were both scarce.
Banco Santander's bold initiative will influence behavior in the sector. Other banks will quickly take a similar position, because they want to attract clients. Santander made moves early in the crisis to steal clients from the savings banks. Now the banks are most interested in resuming their traditional business and loaning money at repectable interest rates. They know that even though credit is hard to come by, they bought some time in 2013 by making key divestments and meeting EU capital requirements. It was a transition year. Now the banks have to start loaning money even though their conditions will be more stringent than before.
