The governor of the Bank of Spain warns of the risk of delaying mortgage payments too

Recommended reading of the article: Should lengthen the term of the mortgage?

The Bank of Spain governor Jaime Caruana, yesterday warned of the risks of mortgages that adopt modalities "creative" to defer payments of principal or extend the life of them. Caruana said that the growth of the Spanish economy this year will be "slightly below" that recorded in 2005 and opted for a "gradual and orderly reduction" of the current overvaluation of house prices. The Bank of Spain confirmed yesterday that the Euribor stood in March 3105%, its highest level since October 2002.

Jaime Caruana reiterated yesterday, during his speech at the Forum Five Days, the "concern" that the Bank of Spain has been saying since late last year by offering mortgages with little traditional characteristics. For example, those that have a long-term depreciation of some banks offer up to 50 years-or granted grace periods, are paid only the interest-up to ten years.

Caruana warned entities to provide more information to customers about these products because "some families may find themselves with major surprises" in case there is rising rates too much or lengthening the life of their mortgages.

The governor of the Bank of Spain recalled that the level of indebtedness of households has grown in a few years to amount to 110% of disposable income. This pace of growth, he said, is not sustainable "so long." Moreover, he warned that the types of mortgages are not going to stay as low as at present and that households more vulnerable to price increases will be most indebted, "which often coincide with those of lower income levels and greater propensity to spending. "

The Bank of Spain confirmed yesterday that the Euribor, the benchmark for setting mortgage rates, reached in March 3105% 2914% compared to February, its highest level since October 2002. In the last twelve months, has risen seven tenths.

Caruana said that the families will be in "perfect condition" to meet its commitments, provided it does not deteriorate the employment situation. As for the price of housing, said that the latest official figures already show a slowdown in the pace of growth. If this trend takes hold in coming quarters, he said, the scene of price adjustment will be that of a "gradual correction of the overvalued today."

Written by Carlos Lopez on April 19, 2006 with 3 points.
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# 1, aa

April 19, 2006, at 14:00.

"Gradual correction of the current overvaluation," said the governor of the Bank of Spain.

"Overstatement" to say means that are worth less than it pays now. I find it significant that one authority and make such a comment, although that has happened quite unseen.

# 2, GLOBARIEL

April 28, 2006, at 12:22.

I hope he is right and will soon stop raising the price of housing. I work in that industry and it is increasingly difficult to sell an apartment, because the people who sell every time you do so at higher prices and people who buy what you want to do for very low prices and so complicated that everything is consistent.

Actually housing prices are above their real value and that means making real virguerias to get mortgage loans out there and that charges are affordable (below 600 € and leaving few).

Ojala estubiese housing prices that really are worth and win-win, because they be purchased and sold more, and the money would not be stalled and that move is what has to happen.

A greeting to all and "God's Will."
Globariel

# 3, javier

June 15, 2006, at 15:41.

I fully believe that the housing bubble will burst for several reasons that explain later ..
But how will lower prices if people are still buying? ...
I also have internalized the motto "never go down the floors" and "we need to invest in brick", with 1000 € salary this year, I think that investing invest .. invest more.

Well exposed that there is a housing bubble.
1. I know that the Spaniards we are not better than the others so that we can pass the bad things that have happened to the countries that have had such increases of 2 digits in periods of 2 or 3 years (hong kong) or +, Japan .. and other countries such as Germany, to take price falls in a period of more than 10 years in a row. (between 1990 and 2006) But as our economy is stronger and more efficient than the 3 cases (there is) because the logic here storeys never go down.

2. And the generation of baby boomers from 30 to 40 years who has been married floor now has purchased the generation of 20 to 30 .. is much lower.

Well what happens.

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