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Default on Land Loans Hits a Record High
17/10/2014 – Expansion
Default rate on mortgages for land purchase showed 10.1% in June, meaning a huge leap since the beginning of the recession when it was close to 0%, informs the Spanish Mortgage Association (abbreviated to AHE by its name in this language).
The data also indicates that the rate on land acquisition for home construction was 7.1% in 2013 and 5% in 2012.
In comparison with the loans granted for property purchase (6.1%) or renovation (7.3%), default on land posts much higher.
When it comes to lending institutions, banks and savings banks registered an 11.1% rate, while cooperative entities a 4% default.
The figures go along with construction loan perfomance which marked 33.3% at the end of the first half of the year, also hitting a record highest.
However, the statistics contrasts with rise in land prices by 3.5% in the second quarter of 2014 over the first quarter of the year, and presently a square meter costs €146.4, the Ministry of Public Works reports.
This period of time (Q2) also saw a rebound in the transferred area volume which amounted to 5.6 million square meters sold for a total of €547.2 million.
Original article: Expansión
Translation: AURA REE