Are We Facing a Mortgage Crisis in Belgium?
A brief explanation first. What is a mortgage? It is a loan granted to you by a credit institution and secured by a mortgage registration on a property owned by the borrower or one of the co-borrowers.
Is it a loan intended solely for the purchase of a house or any other real estate?
Not at all. In people’s minds, the mortgage loan is only used to buy a house or real estate. This is true but only partially. Indeed, you can use a mortgage loan for reasons other than buying a house.
Thus, many borrowers want a loan and have no other guarantees to offer than to mortgage their house. If the credit institution considers the guarantee to be sufficient because you own the house and it is free of charges or the new loan is compatible with the existing mortgage, it will grant you a second loan which will also be a mortgage but will rank after the first ongoing mortgage.
Therefore, a mortgage loan can be granted to finance renovation work on the house but also to obtain a sum of money unrelated to the house that you might not have been able to obtain within the framework of a traditional installment loan (PAT) due to insufficient guarantee.
Does this mean that I can always get an installment loan by mortgaging my house? No, because a mortgage generates significant costs. Indeed, you need to go before a notary and request a mortgage registration in the mortgage registers, etc. This costs money. At Crédit Populaire Européen, we have set this limit at €25,000.00. This means that the financing request must be at least €25,000.00 for us to grant you a mortgage.
Can self-employed individuals apply for a mortgage? At Crédit Populaire Européen, we regularly work with self-employed individuals. The mortgage is often a very effective solution for the self-employed or those in liberal professions who face a temporary cash flow shortage because their clients do not pay their invoices or pay them relatively late. The mortgage solution thus allows many merchants to avoid resigning themselves to stopping their commercial activity.
The number of mortgage applications fell by 42.5% in September compared to the same month a year earlier, according to figures published on Monday, October 8, 2012, by the Professional Credit Union. The underlying amount of credit applications also decreased by 26.8%. As for the number of mortgages granted, it fell by 62.3%. “Clearly, the decline in consumer confidence and the uncertain economic situation are compressing mortgage demand. However, the granting of mortgages is currently just below the level of 2010-2011, two record years during which credit granting benefited from a boost thanks to government measures in favor of energy-saving investments,” said the professional union.
In fact, successive banking crises explain a certain lack of liquidity in banks and a contraction of credit. Banks have probably become a bit more cautious in this area to avoid disasters such as those experienced in 2008 in the United States and in 2010 in Spain, which is, after all, a respectable prudential approach.