Tuesday, July 27, 2010

Spain mortgage lending falls in May

(MADRID) Spanish mortgage lending fell in May for the third straight month after a brief rise in February as the country's banks, five of which failed a Europe-wide stress test on Friday, continued to withhold credit.

Mortgage lending for homes totalled 6.4 billion euros (S$11.3 billion) in May, down 7.2 per cent from the same month a year earlier and following a one per cent drop in April.

February marked the first annual rise in mortgage lending in almost three years, a brief respite for a battered property sector hit by the credit crunch after a decade of strong growth.

Spain's mostly unlisted savings banks were heavily involved in expanding the property bubble by providing easy lending conditions to home buyers and property developers.

According to the Bank of Spain, the savings banks which failed the stress tests, which included property value declines of around 30 per cent, would need 1.835 billion euros in additional capital to withstand the worst-case scenario. -- Reuters

Source: Business Times, 27 Jul 2010

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