Alarms before the exhaustion of the credit system and higher rates
Summary of news:
- The mortgage market has been able to reach its ceiling.
- In an environment of rate hikes, lengthening the repayment of mortgages is useless.
- The banks that have less risk.
Banks and savings banks have made their jump alarms before the unstoppable advance of the housing market and excessive indebtedness of Spanish families.
The association Mortgage Spanish (AHE) has Afrim that the current pattern of recruitment of such loans is exhausted and can only raise the already excessive reliance on Euribor. If it joins the huge volume of credit alive, believes that the risk to the economy is obvious. Therefore, demanded the Government to expedite the legislative reform promised in March, with more flexible and inexpensive ways to change the contract.
In a tough speech, the president of the AHE, Gregorio Mayayo, reviewed data from 2005, a year in which were granted mortgages valued at 739,296 million euros (81.75 GDP), of which 475,570 million were requested by families. Figures record once again. The number of contracts grew by 10.9% and the average contract urged by 13% to 124,589 euros. Today this ratio already exceeds 138,000 euros.
So far, 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 resources access to housing. "It is possible that this model of mortgage financing is being depleted," he warned.
Mayayo revealed that against a European average of 53% in Spain only to sign a fixed term 0.62% of total mortgages. A reality-driven 'laws and pressure from some official institutions, "he said.
The mortgage debt that is plunging 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 assess this as a real threat to the national economy". The timing could not be more stretch and banks no longer dare to pay 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 Euribor contracts with more variety. He said that it is necessary, since the law, enhance the benefits hedge against new-types and services compared to the widespread formula that the lowest interest is the best.
Written by Carlos Lopez on June 29, 2006 with 4 comments.
# 1, A. Abadi
"The mortgage market has been able to reach its ceiling." What does this conclusion?
-- What banks do not lend more money because of the obvious risk? (does not trust the bank)
-- What the banks do not leave them in the capital market for mortgage money? (who does not trust the bank lends)
-- What individuals consider hiring a mortgage is no longer attractive? (does not trust the buyer).
In my case, I would not rely on any of the 3 cases.
A. Abbeys