A SHARP rise in the number of fixed-rate mortgages in Spain has been reported in the past two years – and they now account for 43% of every new loan taken out.
'The only way is up' for Spanish house prices, says the IMF
18/01/2015
SPAIN'S property price freefall is over and home values are likely to start going up, according to the International Monetary Fund (IMFI).
A report by the organisation presided by Christine Lagarde says the same is true for house prices in the UK, Ireland, The Netherlands and Denmark, all of which have also experienced a property value 'boom and bust' since the Millennium, and that collectively, the five countries have seen a fall averaging around 25%.
But current analyses of the markets in all five EU member States suggest home values 'have either reached rock bottom or are about to', says the IMF.
The report differentiates between the markets in each of the countries, saying the economic crisis, combined with over-building leading to excess supply caused the market to crash much more violently in Spain and the Republic of Ireland than anywhere else, bringing with it a sharper decline in employment and bringing the construction industry to a complete standstill.
Spain and Ireland also saw a much higher level of debt defaults, including bank loans to construction companies and private mortgages which, combined with high unemployment and the impossibility of those affected being able to keep up repayments, has left 'a private sector debt which is hampering recovery'.
The IMF recognises that all five countries have 'taken important steps to aid the recovery' of their housing markets, but 'new ideas may help to continue and accelerate the process', including, in Spain's case, intensifying changes to mortgage laws to allow for the renegotiation of debts and to prevent the debtor from continuing to owe the money once their property has been repossessed.
At present, Spain's legal framework 'only offers mortgage defaulters a partial release – from 20% to 35% - after having paid off a considerable part of the outstanding mortgage, between 65% and 80%, in just five or 10 years', says the IMF.
The report calls for the Spanish government to take the steps recommended by the European Commission in March last year, which involved a so-called 'fresh start system' after three years of payment.
Although this system was mainly set up to help new companies, the IMF believes it would also be workable for individuals.
Related Topics
SPAIN'S property price freefall is over and home values are likely to start going up, according to the International Monetary Fund (IMFI).
A report by the organisation presided by Christine Lagarde says the same is true for house prices in the UK, Ireland, The Netherlands and Denmark, all of which have also experienced a property value 'boom and bust' since the Millennium, and that collectively, the five countries have seen a fall averaging around 25%.
But current analyses of the markets in all five EU member States suggest home values 'have either reached rock bottom or are about to', says the IMF.
The report differentiates between the markets in each of the countries, saying the economic crisis, combined with over-building leading to excess supply caused the market to crash much more violently in Spain and the Republic of Ireland than anywhere else, bringing with it a sharper decline in employment and bringing the construction industry to a complete standstill.
Spain and Ireland also saw a much higher level of debt defaults, including bank loans to construction companies and private mortgages which, combined with high unemployment and the impossibility of those affected being able to keep up repayments, has left 'a private sector debt which is hampering recovery'.
The IMF recognises that all five countries have 'taken important steps to aid the recovery' of their housing markets, but 'new ideas may help to continue and accelerate the process', including, in Spain's case, intensifying changes to mortgage laws to allow for the renegotiation of debts and to prevent the debtor from continuing to owe the money once their property has been repossessed.
At present, Spain's legal framework 'only offers mortgage defaulters a partial release – from 20% to 35% - after having paid off a considerable part of the outstanding mortgage, between 65% and 80%, in just five or 10 years', says the IMF.
The report calls for the Spanish government to take the steps recommended by the European Commission in March last year, which involved a so-called 'fresh start system' after three years of payment.
Although this system was mainly set up to help new companies, the IMF believes it would also be workable for individuals.
Related Topics
More News & Information
MORTGAGE-LENDING has reduced dramatically in Spain in the past year, but that has not stopped homes on sale being snapped up: Over a third were purchased in cash, according to the latest figures.
RESIDENTIAL property sales have been shrinking consistently throughout 2023, but latest figures show this trend is relenting.
MORTGAGE signings have dropped by nearly a fifth as a result of the greatest leap in interest rates in over 20 years – but debt defaults have not risen, despite the Euribor being at its highest since 2011.