What's happening with the repossessed properties held by the banks?

There are some signs that the Spanish banks are now starting to address the mountain of stock they have accumulated although don't get too excited as it looks like they won't be in too much of a rush to shift it preferring instead to drip feed it back onto the market.

One of the ways they are addressing this is by offering drastically improved mortgage terms but only on their own repossessed properties. It seems that they are keen to improve their finance terms rather than reduce property prices too much. This has led to quite serious accusations that the Spanish banks are keeping property prices in Spain artificially high.

 José Luis Campos Echevarría recently commented in Spanish newspaper El Mundo:

 “With the majority of the big developers drowning in debt, the banks are now the ones determining the rhythm of prices. The main answer is that the banks are selling their own stock by improving their financing terms rather than dropping prices“

“This strategy will cost them in the medium term, but it lets them solve the big problem they have in the short term, which is to off-load properties without prices falling too much.”

'Secondly, by drip-feeding their stock, rather than flooding the market, Spain may have a monumental housing glut, but banks are keeping a big chunk of it off the market.'

Further, it also seems that the dizzy days of 100% mortgages are not behind us. The Spanish banks are back to their bad old ways of trying to attract people without any capital.

 “They are making the same mistakes as they did in the boom,” one expert told El Mundo.