Mortgage market suffered worst year in 2012 since bubble burst

Number of home loans granted declined to lowest level in the current crisis

Spain’s housing market remained in a dire slump last year as the number of home loans granted by lenders declined to the lowest level since a decade-long boom came to an abrupt end around the start of 2008.

According to figures released Tuesday by the National Statistics Institute, the number of mortgages handed out by the banking sector fell by 32.7 percent in 2012 from the previous year to 274,715. The average value of the mortgages granted declined 7.8 percent, reflecting ongoing falls in house prices, while the total amount lent to purchase housing declined 38 percent to 1.783 billion euros.

The figures reflect simultaneously a lack of liquidity in the financial sector and the precarious nature of a labor market where unemployment rose to 26 percent at the end of last year, the highest level on record.

In December alone, the number of mortgages granted fell 27 percent to 17,577. The number of home loans granted has now fallen for 32 months in a row.

Leading real estate website idealista.com said in its website. “The year 2012 marks the sixth year of consecutive falls. From the highs of 2006 when 1.342 million home loans were granted, the decline is around 80 percent.”

“In 2012, practically a third fewer mortgages were granted compared to 2011,” Manuel Gandarias, the head of research of the website pisos.com, said in an emailed statement. “These figures are revealing, given that they are linked to the lack of liquidity and solvency of the financial system. Since the start of the crisis, only in 2007 and 2010 were there single-digit falls. Without a revival in the credit market, the housing market will remain the same.”

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