One of the ways that rising interest rates can cause distress in the housing market is if they lead to a significant increase in foreclosures and repossessions. With interest rates rising fast, how exposed is the Spanish housing market to this kind of distress?
Rising interest rates increase costs for borrowers with variable rate mortgages, which can increase ‘mortgage delinquency’ – a charming term to describe borrowers who are in arrears or default on their mortgage repayments and are on the slippery slope towards foreclosure, which can cause much distress in the housing market if the delinquency rate gets too high. How much distress could today’s rising interest rates cause the Spanish housing market? I take a stab at answering this question in the video analysis below.