Banks approved 100 billion euros in risky mortgages
Loans in danger of default were largely granted to young people and immigrants
The Spanish banking sector approved more than 100 billion euros in high-risk mortgage loans, which are in danger of default and could cause losses for many of the country's leading lending institutions, the Bank of Spain has learned.
Such mortgages represent one out of five approved by savings banks?cajas?and banks. Most were made to immigrants and young people with temporary contracts before the crisis gripped the economy.
Banco Santander Vice President Alfredo Sáenz likened the instruments to the subprime loans that were granted by US banks.
The central bank asked all the country's lenders for data on housing loans and discovered that those financed for 80 percent or more than the value of a property's appraisal were six times more likely to default.
Among the institutions that hold the biggest number of these high-risk mortgages with 80-percent financing are Caja Madrid-Bancaja (19.2 billion euros); BBVA (15.5 billion euros); Santander (9.2 billion euros); La Caixa (9.2 billion euros); and Caixa Catalunya (6.5 million euros).
"It is scary that a lot of these mortgage loans were granted higher than the market price," said José Ignacio Navas, a notary and coordinator of the housing monitoring unit. "I believe that a lot of these appraisals were done right."
