Alarms before the exhaustion of the credit system and the rise in rates
A summary of news:
- The mortgage market has been able to reach its ceiling.
- In an environment of rate increases, lengthening the repayment period of mortgages is useless.
- The banks have to gamble less.
Banks and savings banks have made their jump alarms before the unstoppable advance of the housing market and excessive borrowing by Spanish families.
The Spanish Mortgage Association (AHE) has Afrim that the current model of contracting such loans are exhausted and do nothing but increase the already excessive dependence on the Euribor. If it joins the huge volume of credit alive, believes that the risk to the economy is evident. Therefore, it required the Government to speed up the legislative reform promised in March, with a more flexible and cheaper to change the contract.
In a tough speech, the president of the AHE, Gregorio Mayayo, reviewed data from 2005, a year that were granted mortgages valued at 739,296 million euros (81.75 a GDP), of which 475,570 million were requested by families. Record numbers once again. The number of contracts grew by 10.9% year contract and half are strongly by 13% to 124,589 euros. Today this ratio is already in excess of 138,000 euros.
Until now, the system has endured well, based on low interest rates, lengthening the time limits and increasing the percentage of the price of the flats provided by the entities. Something that has enabled a large population of limited access to housing. "It is possible that this model of mortgage financing is running out," he warned.
Mayayo revealed that compared with an EU average of 53% in Spain is only sign a fixed term to 0.62% of total mortgages. A reality-driven 'laws and pressure from some official institutions, "he said.
The mortgage debt to add 82% of GDP and that the monetary policy decided by the European Central Bank and not the Spanish, he recalled, "who has done most analysts valued it as a real threat to the national economy." The deadlines are not banks and stretching more boxes and no longer dare to give amounts far above a limit on the price of houses. The most exposed, he said, which was signed between 2003 and 2005.
Thus, the AHE recommended reducing exposure to the Euribor contracts with more variety. He asserted that it is necessary, since the law, enhancing the advantages hedge against new-types and services compared to the widespread formula that the lower interest is the best.
Written by Carlos Lopez on June 29, 2006 with 4 comments
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