In Spain, 581,441 people own a house worth less than the mortgage that are still paying, a quantity that could rise to 668,940 in 2014 and to 710,386 in 2015. This rate will increase by 22% in the next two years.
The first research paper on underwater mortgages in Spain has been conducted by Kelisto.es together with the CEBR (Centre of Economics and Business Research), aiming to paint a picture of an issue affecting thousands of households.
The major reason for this mousetrap was the sharp decline of housing prices as a result of the bursting of the real estate bubble. From historic maximums in 2007, housing value in Spain has dropped by 38.5 %. In addition, the country is going through a deep economic crisis, unemployment rate at maximums and banks being restrictive on credit.
The value of this shortfall adds up to €13bn. In other words, the difference between affected houses value and the cost of the mortgages is €12.9bn, and will go up until €16.2 in 2014(+29.5% annual) and €19.5 bn in 2015 (+17.1% annual).
Catalonia and Madrid are the most affected areas
The effects of this problem have not been felt the same way over the national geography. In these two regions housing prices have dropped by 47.2 % (Catalonia) and by 43.4 % (Madrid) from their historic maximums, registered before crisis outset. Catalonia and Madrid are followed by Comunidad Valenciana (11.6 % of total), Andalucia (11.4 %), Castilla y León (4.6 %). On the opposite side are Ceuta (0.07 %), Melilla (0.07 %), Extremadura (0.8%) and La Rioja (1 %).