Cost of Spain’s Housing Bust Could Force a Bailout |
| New York Times - Apr 24, 2012 |
By any measure, the Spanish real estate boom was one of the headiest ever. Spurred by record-low interest rates, Spaniards piled into holiday villas along the Costa Brava, gaudy apartments in Madrid and millions of starter homes throughout the country.
Marta Afuera Pons is juggling two mortgages — one on her house, another on an investment property that went sour — and is about 350,000 euros in debt. She is trying to persuade her lender, the savings banks BMN, to take back the mortgage and the property.
But since the frenzy drove Spanish home prices to a peak in 2007, they have fallen by at least one-fourth, and the bottom seems nowhere in sight. As Spain endures its second recession in three years and unemployment nears 25 percent, an increasing number of debt-heavy Spaniards can no longer meet monthly payments on the mortgages that their banks were all too eager to give.
With a rising portion of Spain’s 663 billion euros, or $876 billion, in home mortgages at risk of default, many economists say it is only a matter of time before some of Spain’s biggest banks will need a bailout. And the Spanish government, staggering under its own debt and budget deficit burdens, may not have the money to come to the rescue.
Read Full Article from New York Times
- Posted: 2012-04-24 10:51:02
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