12/03/2014 – El Pais
One of the peculiarities found before in the Spanish REO market was the resistence to delinquency of mortgages but this wall has fallen as well. Seven years of recession can damage everything, or almost everything. (…).
Between 2012 and 2013, entities listed within the Ibex 35 (stock benchmark for Madrid´s exchange market – translator´s note): Santander, BBVA, CaixaBank, Bankia, Banco Popular, Sabadell and Bankinter, advanced from having €17.204 million in unpaid mortgages with property as a collateral to €24.539 million. The numbers point at a 42% increase. To contrast, in 2008 the delinquency rate was equal to 0.5% and remained at 2.4% till the end of 2010. In 2012, the rate showed 4.5% and in December 2013 it went up to 6.5% record high (if credit outstanding included, it would be of 10%). (…).
In reference to the latest data published by the Bank of Spain, overall delinquency in the sector has grown up to 5.36%. The aforementioned banks granted €377.225 million for property purchase, out of which 13% was left unpaid.
Experts share an opinion that the main culprit for the negative numbers is the prolonged, dramatic unemployment. According to latest official data, 2.13 million people assigned as jobless do not receive any kind of aid. Moreover, almost 700.000 households lack any sort of income. These facts make the delinquency unstoppable and fuel eviction frequency (…). Most of the troubled mortgages were granted in 2008 and 2009, just before the recession emerged. (…).
Serious situation concerning the property market in Spain has been already covered by Ireland. There, delinquency rate reached 18.4% (…). But what will happen with Spain? As Itziar Sola from AFI (International Finance Analysts´Bank) assures, by December this year the number of unpaid mortgages will have grown to 35.900 million (4.000 million more than the Bank of Spain data).
The sudden upsurge could be also explained by impact of a regulation introduced in 2013 that deepened the seven banks´mortgage default. In Santander, the rate increased by shocking 152%, in BBVA by 61%, Sabadell by 51% thanks to the CAM´s portfolio content, Bankia represents €6.830 million with delinquency of 8.8%. CaixaBank registered rise by 55%, whilst Popular only 7% and Bankinter has even smaller, a 2.7% rate. (…) Experts agree that Sareb´s activity is very important in dealing with toxic mortgages.
Original article: El País (Íñigo de Barrón/Miguel Jiménez)
Translation: AURA REE