SPANIARDS used to complain that housing cost too much. Now they fret that, with unemployment at 26% and incomes tumbling, they can no longer afford it at any price. The Spanish are among Europe’s keenest owner-occupiers, with 83% living in their own homes. A culture of immobility means that, once a home is bought, it is expected to be for life. For Mariano Rajoy’s government, the problem of repossessions is thus a big headache.The pre-crash bubble saw Spaniards borrow merrily, owing almost twice as much in mortgages as Italians by 2010. The total debt is falling gradually, but is still around €600 billion ($ 780 billion). Some 8% of mortgage-holders are now jobless. Last year 80 families a day had mortgages foreclosed, with their properties usually valued far below the purchase price. Many owe money on homes they no longer own or live in. Passions are running high. A vociferous protest movement blocks the doorways of houses due to be repossessed. It obtained 1.4m signatures on a petition demanding a retroactive law to allow American-style mortgages, where the keys (and ownership) can be dumped on the banks.This spooked banks already struggling with toxic assets from bust developers. With half a million mortgaged properties in negative equity, many mortgage-holders would be better-off handing their homes over. “If half of the potential beneficiaries took advantage of the…
The Economist: Europe
