tommy.irene

The Canary News via The Canary Islander

Are your savings safe? | Retirement and Good Living
retirementandgoodliving.com
Banks impose new rules to reject withdrawals from savings accounts if you have unpaid loans, mortgages and credit card balances. Spanish banks impose new savings........ RetirementandGoodLiving.com

tommy.irene

Are your savings safe?
Category: Finance, Retirement locations
Many expats moved to Spain and the Canary Islands at a time when borrowing money from Spanish banks was a relatively simple and straightforward affair. Obtaining a mortgage in Spain, often through the developers of new build properties, and usually at a very good rate of interest, was something that many expats took advantage of. In addition, credit cards, often with very high credit limits, suddenly became freely available in Spain. Unlike the UK, the credit card phenomenon was a relatively new innovation in Spain, but was an opportunity grasped with enthusiasm by both Spanish and expats alike.

notacontrathinker

Seemingly wise advice, however the example given lacked detail.

For example, what illness did they have to return urgently to the UK for ? Why couldn't they have been treated in the islands where they had settled ?

How much was the outstanding mortgage and credit card debt ?

How much negative equity were the couple walking away from with their substantial savings, if any ?

What did their gestoria say ?

EMR

The bank has lent money for a mortgage and credit card and expects that it will be repaid.
Then without notice or explanation the borrower wants to take a significant amount out of their account and leave the country.
You can understand why the bank reacted as it did.
Banks across the world and particularly in the less solvent countries are petrified of " capital flight ". That is why the ECB/EU/IMF insisted on the draconian measure taken in Cyprus.

Dick Dasterdly

I was going to say that the Cyprus job was legalised robbery, but come to think off it that's much the same business as almost all banks Worldwide.

Jon-Bxl

Its clear that you need to keep your mortgage holder and your savings holder separate.... And if you are fortunate to have more than 100k saved... Keep it in separate tranches, in separate institutions..... Separate from any mortgage holder.

Those EU finance ministers keep meeting, about 30 times so far... Dont have the horsepower to fix all this and in their infinite wisdom have decided to go for the people who have saved money .... Both with the 'Cyprus solution' and now serious talk of NEGATIVE interest rates for people saving money.

The banks use this money and usually make more from it, if negative rates come in it gives the banks more horsepower, and makes mattress stuffing more attractive!!

Makes you wonder if they are all in bed together....

To big to fail

Jon

EMR

" Negative interest rates " would not apply to savers.
It is a financial vehicle designed to stop banks hoarding money in "safe " institutions such as the BOE/ECB but rather to start lending and get the economy moving again. Banks would effectively be charged for funds placed in certain institutions ( negative interest ).
It is one of the few " good " ideas to come out of the ECB/BOE.

Domino

it doesn't matter what the interest rate is, it is still robbery

those with personal pensions maturing are being told their pot is worth less because the stock markets are deflated due to "the crisis" - and yet companies are reporting major trading deals, profits and their stocks are soaring.

those with interest bearing accounts are lucky to get 1% interest - subject to income tax.
whilst those with loans are being hit with 15% interest rates - proving that they are the ones who are keeping the "too big to fail" banks afloat. Although they have also taken millions of £/$/€ from funds to lend to small businesses who are unable to access these funds as the banks are using them as a buffer.

Granny had the best idea - keep it under the bed, whilst Mum had the 2nd best idea - never a lender nor a borrower be.

`

Fred James

One problem is the fact that as pension funds near maturity the fund managers usually switch the investments into bonds and that is where the really low interest rates take effect.

Interesting article about it here:-

http://www.telegraph.co.uk/finance/p...nds-crash.html

jackytoo

I would say that is illegal, different account, different pot.

rachelk

I remember the days - not so long ago - when many businesses took 'breaks' from pension contributions on the basis that thanks to the economy, the pension pot was growing sufficiently on its own.

I don't think they did the opposite when the bad times came.

Jon-Bxl

The big advantage of the low interest rates are the mortgage rates.

I was recently helping a friends son, young man doing his mortgage planning for his proposed first home, and was surprised to get a 25year fixed rate capital repayment mortgage (MG) for 4.81 Euros per 1000.

The variable rates were cheaper, of course, but not a huge difference.

However I advised him about the huge problem lying in wait for many people. Those who have benefited with historically low rates.. if they return to a normal level, there may be another hidden housing crisis waiting - when the repayments shoot up. If they are not saving now they will be in a lot of trouble later.

There is little chance of the MG rate going down for the variable, but a huge chance over the time of the loan that they will go back up - by MULTIPLES of the rate today. So I advised the fixed rate.

I have an interest only MG and my payments are a third of what they were at the beginning before the crisis. That is the only positive for me personally. Of course interest only repayments fluctuate more wildly than a repayment MG... but for the past few years, hugely to my benefit. Of course overall I wish the crisis hadn't occurred and the old rates were still in place.

Jon

notacontrathinker

Is that €4.81 per 1000 fixed for the full 25 years ?

Also, back in the dark ages I was restricted to 3 X salary (thankfully). Are they still offering 6 X ?

Domino

I can remember those halcyon days as well - they used the money to pay off debt and then promptly took more money to buy more companies.

that is why so many companies have a high pension debt, but some are paying it back - slowly.
although IIRC even pension debt is tax allowable.

but most board directors get their pensions topped up every year, no debt in that area
it was when I found out at a time of 1-2% payrises for the staff the CEO had been given an increase in pension payment over previous year that was more than my annual salary, whilst the staff pension fund was changed from 60th's to 80th's.

Jon-Bxl

Yes. Absolutely (didnt I say that?)... Fixed for 25 years at that rate.

I also was limited, for me in the old days it was 2.5x salary. But I got sold on an endowment, which I kept when I sold, and funnily enough it expired last month.... It would not have paid the original loan back

These days after the sub prime crisis I dont think anybody would give 6x... And you need a deposit as well..... Especially at historically low interest rates....

Jon