Bank doom and gloom

MUCH of Spain´s massive economic growth over the last decade was led by the booming construction and housing industries. Banks were lending money to the major construction firms like no tomorrow. Apartments which hadn´t already been built were being mortgaged so that the developer had the necessary funds to complete the project. It was highly lucrative and the banks and the developers made millions. So did the councils through building licences and other permits. But along came the credit crunch and the property bubble burst. Banks were left with thousands of apartments because developers and building firms failed. The economic slowdown also hit the thousands of mortgage holders many of whom simply could no longer pay. So is anyone really surprised that there is a banking crisis in Spain? Well no, not really. It is not really a banking crisis it is more a building crisis. If the government manages to get the property market moving again then it will effectively solve the woes of many of the banks. Thankfully the government has re-introduced tax relief on new mortgages but they still could do a lot more. For years many young people couldn´t get on the property ladder because they simply couldn´t afford house prices. Now there is a golden opportunity for the government and the banks to promote cheap loans for first time buyers. Also, the government needs to remove senseless legislation.