Posted by: Dirk | August 17, 2007

Euribor’s rise gives Spain a feeling of uneasiness

Just last week I wondered whether the mortgages in Spain were really so low as claimed by Pedro Solbes, the finance minister: 30 per cent of income. Today, El Pais published an article which includes recent number from AHE (Asociación Hipotecaria Española):

En julio del año pasado, la hipoteca media en España ascendía, según datos del INE, a 143.497 euros, lo que con un plazo de amortización de 25 años y un diferencial del 0,5 %, se traducía en cuotas mensuales de 760,52 euros, un pago que para los que ahora tengan que afrontar la revisión anual de su préstamo se incrementará hasta los 841,97 euros.

So, the average loan was worth 143,497 euros. Eurostat’s forecast for 2007 is an average per capita income (gross) of 23,500 euros. This would translate into a monthly income of around 1,950 euros, which is still gross. We are already looking at over 43 per cent of gross income earmarked to pay off debt (for those who had their annual revision – for the rest it’s 39 per cent). According to a gross-net-calculator the net income would be 1,540 euros. Dividing the monthly payment of 841,97 euros by a net income 1,540 euros leaves the average Spaniard paying over 54 per cent for his loan.

EDIT 20/08/2007: My calculation gives you the numbers for Spaniards who took out mortgages, not for the average Spaniard in the absolute sense (not everybody took out a mortgage). Maybe that is the difference between Solbes’ numbers and mine. Still, his numbers are misleading.

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