The president of AHE (Spain’s Mortgage Association), Santos Gonzalez, has warned that the banks do not have the financial capacity to assume the debt of property developers, which amounts to around 325,000 million Euros, thus gravely endangering the viability of the Spanish property sector as well as Spain’s financial industry.

The underlying problem, explains Gonzalez, is the difficulty to refinance 15,000 million euros worth of interest payments against assets which are continuously losing value. Gonzalez went on to further unveil how the credit ratings are negatively affected by this property debt.

Ever since the Spanish property bubble burst, there has been a plethora of opinion. While some warn “Spanish property prices [are] set to fall further“, others talk of a “surge in demand“.

The opinions are mixed and the debates heated.

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