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Spanish mortgage lending falls by half

Catherine Deshayes

The total value of new Spanish mortgage lending in August was down 47 per cent on the same time last year.

According to the Bank of Spain the total value of new mortgage lending in August was £3.5 billion, down 47 per cent on last year.

Spanish Property Insight reports that mortgage lending in Spain has been falling since September 2006, but back then it was only down by 4.63 per cent.

The credit crunch, which broke in the summer of 2007, helps explain why new mortgage lending is now shrinking so dramatically.

Due to the credit crunch banks are now both short of funds and hoarding cash, but not lending to home buyers.

However, there are other factors at work behind the dramatic fall in new Spanish mortgage lending.

Euribor at or close to all time highs are driving up mortgage costs which reduces demand as does rising unemployment, and the belief property prices will continue to fall in the future.

Source: www.homesworldwide.co.uk