Spanish residential mortgages decreased for an 18th month in October as banks reined in lending amid a surge in borrowing costs and bad loans.
The number of home loans fell 43.6 percent from a year earlier after a 42 percent drop in September, the Madrid-based National Statistics Institute said in an e-mailed statement today. Total capital lent on all mortgages fell 40.6 percent, it said.
Spain is struggling to digest a glut of 700,000 unsold new homes since the collapse of the building boom that has pushed the unemployment rate to 23 percent. Prime Minister Mariano Rajoy, who holds his second cabinet meeting on Dec. 30, has pledged to bring back tax rebates for mortgage holders and clean up an estimated 176 billion euros ($230 billion) of soured assets linked to real estate from the books of the country’s banks.
Bad loans as a proportion of total loans by Spanish lenders jumped to a 17-year high 7.42 percent in October, the Bank of Spain said on Dec. 19.
The average price of Spanish houses and apartments declined 7.4 percent in the third quarter from a year earlier, the National Statistics Institute said on Dec. 15.