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House Swapping
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PROPERTY MANAGEMENT HAPPY HOMES ALGARVE
ALGARVEAN COTTAGES VILLAS APARTMENTS TOWNHOuSES QuINTAS
A brighter future
Happy Homes has since 2003 provided outstanding property management services and value to non-resident property owners. covering every requirement, Including Inspection, maintenance, administration,letting and marketing services, we have developed relationships we are proud of with reputable accountants, architects, local councils, builders and housing professionals. Let happy Homes ensure that you have the best possible support to maximize and protect your investment for a brighter future!
happy homes lda.
Rua Dr. Parreira 137 next to Barclays Bank 8800 - 346 Tavira Contact us today: 281 320 283 www.portugal-accommodation.com
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GOLF PROPERTIES VILLAS APARTMENTS TOWNHOu SES PLOTS
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Covering the whole of the Algarve as independant real estate agents, we can provide you with unbiased advice when you decide to purchase a property and can introduce you to a wide choice of reputable mortgage banks, architects, lawyers, builders, chartered surveyors and interior designers. We have been in business for over 12 years, finding the right property for countless satisfied clients. We currently have over 700 properties available online and would be very pleased to help you find your ideal home.
If you are the owner of a good quality property and wish to sell, please contact us to arrange an appointment Contact us today: 281 320 281 www.landandhousesalgarve.com
TAVIRA VILAMOURA One thing that became clear during the financial crisis is that not all debt obligations are equal. Where your pledge to repay a loan seems to be written in stone this is not the case for a bank. if a bank has financial difficulties it is considered ‘too big to fail’ and governments intervene with bail outs to avoid the bank from going out of business. if you have a mortgage on your property and you fall behind with your monthly payment schedule, the banks are not very lenient to assist you during a difficult period. actually, it is more likely they will demand repayment in full. so when a bank is having financial difficulty they get bailed out, where on the other hand your debt obligation to the bank seems to be written in stone. if you owe a bank a small amount of money and you fall behind payments it is your problem, if the amount owed is large enough it is the bank’s problem. there are people who argue that Portugal should default and would be better off leaving the euro and go back to the escudo. they should be careful what they wish for as they may not like the result. For Portugal the introduction of the euro lead to declining interest rates, which before used to be in the mid to high teens. mortgages are priced using a base rate - euribor – plus a spread/mark up for the bank. if Portugal would leave the euro, the base rate will be determined again in lisbon by the central bank of Portugal and rates will shoot up dramatically. if you know that a staggering 94% of all mortgages in Portugal are floating rate mortgages based on 3 or 6 month euribor, you
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PaUl MIlsOM
Premier painting services
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Casa anibal r/C loja B, estrada da manta rota 8900-038 vila nova de Cacela Company ami 7673 Office: tel/Fax 281 952 820 mobile: 00351 911 041 861/2 SaleS: www.algarvemantaproperties.com rentalS: www.algarvemanta.pt email: sarah@algarvemanta.pt
altura 260.000€ ref: 1300
Charming house situated in the beach resort of altura only 400m from the beach. With front and rear patio BBQ and garden areas. living room with fireplace. very light and airy feel. also on the ground floor shower room, hall and equipped kitchen. On the first floor there are three good sized double bedrooms with wood laminate floors and verandas one with ensuite bathroom and another family bathroom. storage room and garage. the house has air conditioning throughout and mosquito screens.
tavira 350.000€ ref: 1273
very generous and modern townhouse with private pool and double garage. equipped kitchen and a large lounge with fireplace (32m2), patio, BBQ area and private pool. On the first floor there are three double bedrooms and two bathrooms one of which is en-suite. up on the top floor you have an enormous extra room of 34m2 with ensuite bathroom and sliding doors to the roof terrace 65.35m2.this is a peaceful area which is approx 10 minutes on foot to the centre of tavira.
can imagine what will happen with the monthly repayments when the base rate will be readjusted. there will be defaults on a large scale. how could it happen that there are so few fixed rate mortgages in Portugal? For this to explain you have to understand how a bank is funded. their funding is coming from funds on saving accounts, interbank borrowing and the issuance of all sorts of bonds with short, medium and long term maturity dates. each source of funding has a different price (interest rate). some sources of funding are more stable and therefore costlier. in other words, a bank uses a mix of funding sources to keep the cost of money down. they monitor the average duration of their loan portfolio closely to see if the funding mix is appropriate for the current economic environment. in the mid to late 80’s, banks had the balance of their funding wrong. For a long period it paid off to borrow at short term (lower) variable rates to finance the issuance of fixed rate 5/10/20 year mortgages. suddenly inflation picked up and the interest rate environment started to change. short term rates went up sharply and banks were too late to adjust, leading to large losses for some banks. in other words, the interest a bank had to pay to fund their mortgage business was higher than the fixed interest rate they were receiving. this is known as an interest rate mismatch. With fixed rate mortgages the bank carries a higher interest rate risk, which is passed on to the homeowner through a higher rate. With floating rate mortgages banks have offloaded this risk to the homeowner. When interest rates go up, this additional funding cost for a bank is simply passed on every 3 or 6 months when the interest on the loan comes up for renewal. this works fine for as long as rates are falling. When interest rates go up again, homeowners will feel the pinch and one can imagine not everybody will be able to service their mortgage obligation if rates go up high enough. Putting this in perspective to the current situation in Portugal, one can not but wonder why a bank would think that hundreds of thousands of families with little or no financial knowledge would be better at managing interest rate movements above the bank managing this themselves in a centralized, highly specialised and knowledgeable treasury
There are people who argue that Portugal department. should default and would be better off much has been said about the bonus culture in banks leaving the Euro and go back to the Escudo. and other perverse incentives They should be careful what they wish for as that need adjustment. in the mortgage business this was – they may not like the result! and still is – the case. during the boom period banks should have applied the brakes, but instead have acted in a highly pro cyclical manner and as such have contributed to a larger increase in property prices than what would have otherwise been the case by allowing high (80-90%) loan to value (ltv) ratios, low spreads (0.5 – 0.8%) and actively promoting floating rate over fixed rate mortgages. this means a higher number of prospective buyers qualified and were also possible to borrow more. now that property prices have fallen by as much as 30-40% banks are becoming conservative at the wrong time by
PROPERTY MANAGEMENT PROPERTY RENTALS
By the sea, in the mountains or in the city... enjoy your stay with us. We’ll take care of you and your house as we would our own.
Tlm:(+351) 915 500 141/2 Office (+351) 961 952 148 Fax (+351)281 971 076
Ângela Dias Tel (+351) 969 459 200 Rua José Pires Padinha, No 44, Escrit.13, 8800, Tavira eapr@iol.pt • eapm@iol.pt www.east-algarve-property-rentals.com • www.east-algarve-property-management.com
lowering ltv ratios to 60 - 70%, increasing spreads (3.5 – 4.5%) and a general reluctance to initiate new mortgage activity due to liquidity/ balance sheet constrains. the liquidity constrains have more recently been alleviated as banks borrowed euro 1020 billion through the ltrO for 3 years at a fixed rate of 1% interest per annum. Part of this money could be used to deal with non performing loans while still make a healthy profit. unfortunately the money from the ltrO came with no strings attached. if past experience is a guideline, these funds can also be used by a bank to make easy money through the relative risk free purchase of government debt providing a yield pick up of 4 to 5%. how a bank runs their business is up to them to decide. however, when they are bailed out with tax payers money they can expect to be scrutinized by society especially when they are acting in a harmful way. For instance, if a family with a mortgage would like to change their current floating rate mortgage to a fixed rate, their interest rate will go up much more than necessary as the spread of 0.5 to 1% immediately goes to 3,5 to 4,5. the same is true when a family with a floating rate mortgage wants to move to another property while keeping the same mortgage; the spread on top of the base rate (euribor) increases immediately. in practice this means they can’t afford to upgrade or downsize and simply choose to stay where they are. the lower volume of property transactions has not lost its effect on the real estate sector. also local councils are faced with budget deficits and on the brink of default which is partly due to lower income from imt (property transaction tax). if only the banks would act in a more responsible manner, the economic downturn would be much less severe. While circumstances may change, the end result remains the same as banks often end up making the same mistakes.
Robert Bijker. Land & Houses algarve – yellow Homes www.landandhousesalgarve.com Rua dr. José Pires Padinha 178 8800 - 354 Tavira Tel: 281 320 281, Fax: 281 321 901 (aMI – 6232) www.eastalgarvemag.com
Budgangingm €100,000€3.5miin.
OuMIgidagn akingman wih cnfimdvii viwing.
Iuaindin ingu aca KaE
:00351926360484 :ka@ah.c.uk
INSCRICON.01961
LICENÇA No 504-AMI
MAIN OFFICE – E.N.125, Cevadeiras, 8900-024 Vila Nova de Cacela TEL: 281-951165 FAX: 281-951438
CABANAS OFFICE – (Waterfront) Ava Ria Formosa, Centro Comercial Loja 2, 8800-591 Cabanas de Tavira TEL: 281-370277 FAX: 281-370761
HOUSE IN TAVIRA COUNTRY- ▲ SIDE - 2 bedroom house w/ 1.490m2 of land, situated approx. 10 mins drive from Tavira town and beaches, w/ beautiful countryside and stream view. Sold furnished and equipped.
€180.000
▲ COTTAGE - NEIGH. MONCARAPACHO - Semi-detached algarvian cottage w/ garden (approx. 415m2) w/ carob and almond trees. Quiet location in the countryside, lovely sea view. Situated approx. 5 mins drive to Moncarapacho and 5 kms to Fuseta.
€95.000
LwL Properties.com,
Rua 1º de Maio, nº14, 8800-360 Tavira Office: 00351 281 327 656, Lisa: 00351 910 019 604, voip: 02070999193 Email: info@lwlproperties.com Web: www.lwlproperties.com
WAnTED
prOperTies FOr sale BeTWeeN €200,000 & €300,000
Three Bedroom Apartment, Tavira, SPECIAL EASTER PRICE €130,000.
ref: 2095519 spacious three bedroom apartment in mato de santo espirito, just ten minutes away from Tavira. Comprising of three bedrooms, two bathrooms, lounge/ dining room, fitted kitchen, storage, and private roof terrace with stunning views over Tavira and the ria Formosa. Other features include air-conditioning and double glazed windows, entry phone, underground garage and elevator.
TAVIRA TAVIRA
4 Bed Town Apartment with Roof Terrace €175,000 Reduced for Easter ref:2354452
This historical building is bursting with character and charm. Built in the 1930s in traditional moorish design the apartment has recently been sympathetically renovated to blend modern features with the best of the old. right in the heart of Tavira with a roof terrace with stunning views this is a perfect gem.
