The total value of new Spanish mortgage lending in August was 4.5 billion Euros, down 47% on last year, according to the Bank of Spain.
New mortgage lending has been falling since September 2006, when it fell by a modest 4.63%. The credit crunch, which broke in the summer of 2007, helps explain why new mortgage lending is now shrinking so dramatically.
The credit crunch means that banks are both short of funds and hoarding cash, not lending to home buyers, but it is not the whole story. There are other factors at work behind the dramatic fall in new Spanish mortgage lending: Euribor rates at or close to all time highs are driving up mortgage costs, which reduces demand, as does rising unemployment, and the belief that property prices will fall in future.