Defaulting on mortgage repayments in Spain in 2009 soars to 4%
According to forecasts made by the Spanish Mortgage Association (AHE) defaulting on mortgage repayments is expected to remain at record levels and will close at 4% at the end of 2009 compared to just 2.36% for 2008 due mostly to the rise in unemployment. According to the association ‘the rise in unemployment since the beginning of 2008 will become the principal factor for the rise in the rate of households getting into debt’.
In fact the prediction of 4%, which is half the figure which is expected for overall indebtedness believes that the rate of defaulting on mortgage repayments will slowdown compared to the first quarter of 2009 given that it has already tripled since last year when it stood at just 0.991% for the same period.
Furthermore the association also points out that section of society that is vulnerable to the risk of unemployment is less than that which is at risk from interest rate rises.
The rate of defaulting amongst the private residential sector was registered to be 4,52% last April which is four times the level registered in April 2007 and contrasts with 1.37% registered in April 2008. Experts have also pointed out that mortgages are the last thing that Spaniards stop paying.
With a view to the future the AHE predicts that in 2009 and 2010 defaulting on mortgage repayments due to interest rate rises will gradually decrease given the current low rate of the Euribor (1%).
On the other hand, defaulting on credit used to finance activities related to the property sector stood at 7.58% in March this year which is more than seven times above the rate recorded in March 2008 (0.89%). In addition, defaulting on credit repayments in the construction sector stood at 6.76% in March this year compared to 1.22% for the same month in 2008.
Source: El País