Socialists pledge mortgage extension help

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Opposition claims promise is driven by election and crisis fears

26 February 2008

MADRID - The governing Socialist Party on Monday promised to bring relief to cash-strapped home owners if it wins the general election on 9 March, saying it will work with banks, registrars and notaries to eliminate costs associated with lengthening the repayment period of home loans.

In a move that calls into doubt the government's previous insistence that Spanish households are financially solvent in spite of high interest rates, high inflation and a slowing jobs market, Economy Minister Pedro Solbes billed the move as a way to help struggling families.

"Some families are facing a tough situation in which they are having difficulty making payments on their mortgages," Solbes acknowledged. "Some overstretched, some made mistakes and some have suffered from circumstances out of their control."

He said that if the Socialist Party wins the next election he will work with industry representatives to bring down the cost of lengthening the repayment period on a home loan, a process that currently involves borrowers shelling out around EUR 1,000 on average. The state, he explained, would be willing to assume part of that cost in order to ensure the process is free for borrowers who need it and ceases to act as a disincentive to negotiating new terms as credit and personal circumstances change.

Though the measure comes on the back of a Socialist promise to offer  - 400 income tax rebates to every worker and pensioner, Solbes denied that the proposals are due solely to the forthcoming election or to fears that Spain is facing an economic crisis.

"Spain is better prepared than ever," Solbes said, arguing that the country is merely suffering from some "clearly defined" problems caused by external factors.

The opposition Popular Party was quick to point out, however, that the government has had an entire legislature to help out homeowners struggling under higher mortgage payments.

"Mr Solbes has had the opportunity to concern himself with the problems of households for the last four years, but he has been unable to introduce a single measure to protect families," Juan Costa, the PP's campaign coordinator, charged.

[Copyright El Pais / A. EATWELL 2008]

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