Mortgage numbers fall for 16th consecutive month in August

 

A report issued today by the National Institute of Statistics (INE) has shown how the number of Spanish mortgages issued fell for a 16th consecutive month in August, as lender are tightening their belts on potential bad loans.

The number of mortgages issued fell by 41.7% compared to August 2010 and 47% on July 2011, with the total sum lent out falling by 40.9%.

With mortgages so hard to come by at the moment, it aonly adds to the difficulty that market faces in moving the estimated 700'000 unsold properties on the market. The collapse of the Property & Construction sector, which led to the recent slump in the economy has also been responsible for pushing the rate of unemployment past the 20% mark.

The Banking Industry as a whole reported an increase in the bad loan ration of 7.15% in August, the highest level seen since 1994, according to the Bank of Spain.

Property prices have now fallen by 5.5% during Q3, represnting the 12th consecutive quarterly decline, according to the Ministry of Public Works & Housing. With no prospect of a job, however, and a slim chance of obtaining a mortgage even if employed, house prices are still out of reach of many Spaniards.

Although the ruling PSOE have tried a number of incentioves to stimulate the property market, such as reducing the purchase tax on new properties from 8% to 4% for a 4 month period, it is doubtful that the measure will have much of an impact. For their part the PP opposition has pledged to reintroduce tax rebates for mortgage holders if they are to assume power after the November 20th election.