Wednesday, Sep 19, 2007
Spain may face a replay of Britain’s ERM crisis in 1992, but this time without the safety valve of easy exit.
Telegraph: Spain faces frightening parallels to Britain
The banks are highly exposed to the Spanish housing market. After rising 270pc since 1995, house prices have begun to fall in parts of northern Spain, slipping 2.1pc in Barcelona and Madrid so far this year. Over 98pc of all mortgages are priced off floating Libor rates, causing mortgage payments to almost double in under two years. Construction has reached 18pc of GDP, more than Germany (15pc) at the height of the reunification boom.
Posted by chris @ 09:49 PM (357 views) Add Comment
2 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. alan said...
Spain is different to the UK inasfar as it has no big exposure to sub-prime (not brought out in the article).
The UK is also different inasfar as the London & SouthEast does not have an over supply of houses. I posted yesterday to advise that demand in Spain this year was 0.3 million units, supply was 0.7 million units. Clearly the Spanish building programme is well out of touch with reality.
Spain has been panicking through the summer that Trichet will force up the Euro IRs. This will catch out many folk who thought easy credit & low 3.0% IRs would stay forever. This has an echo in the UK, where I know those taking out cheap 110% mortgages have been caught out, because the UK has pushed up IRs much more than Europe.
I think more than a few bottles were opened in Madrid when Ben decided to drop the US IRs this week!
2. uncle tom said...
Spain has it's own 'home brew' sub-prime.
They appear to be in very deep trouble, but, unsurprisingly, the officials are denying it and the population may be in denial -
"doth protest too much" comes to mind..