Spaniards in the red as spending beats earning

24th May 2005, Comments 0 comments

24 May 2005, MADRID — Spanish household debt exceeded income for the first time last year, according to figures published by the Bank of Spain.

24 May 2005

MADRID — Spanish household debt exceeded income for the first time last year, according to figures published by the Bank of Spain.

"Mortgage credit has gone up 23 percent if one takes into account titled mortgage assets, the consequence being that debt has now surpassed 100 percent of people's disposable gross income," the bank said in a report on financial stability.

Last year, household gross disposable income was EUR 511.5 billion,  but debt spiralled to EUR 526.9 billion.
 
In recent years Spaniards, who traditionally rent their homes, have rushed to get on the property ladder amid prices which have been rising at around 15 percent since the late 1990s.

The boom in the housing sector, which the OECD has warned is overheating,
is fuelled by historically low interest rates.

The Bank of Spain warned that changes in rates could take a toll, but noted that the position of household assets was "still solid, albeit more sensitive to possible adverse fluctuations in interest rates or employment".

In a May 2004 study, the Bank had put the 2003 debt-to-income ratio at 90
percent, double the level of a decade earlier.

[Copyright EFE with Expatica]

Subject: Spanish news

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