Over-Indebtedness and Mortgage Lending

Abstract

This article analyzes the over-indebtedness caused by irresponsible mortgage lending by credit institutions in Spain that have been exacerbated by the economic crisis, the falling value of the real estate market and rising unemployment. This creates the risk of social and financial exclusion of those who can't afford to pay their mortgages.

It is a multidisciplinary approach of the mortgage system that includes the customer's perspective involving the banking sector as well as the Bank of Spain in the solution to evictions. The paper suggests preventive and palliative measures that attempt to restore confidence in the banking system, strengthen the solvency of banks while enhancing the client protection.

Keywords: Over-indebtedness, Responsible Lending, Mortgages, Evictions, Client Protection

JEL Classification: K22, K42, G18, G24