Loan defaults hit new highs

Real estate agencies were the first to start defaulting on their loans. Small- and medium-sized businesses followed soon after. Now Spanish households are struggling to pay their mortgages. Families claimed a 12% rate of default last quarter, and that figure was 5.16% for singles.

This is the highest rate of mortgage default for these groups since the crisis began and is equal to levels from the 1990s recession. Several factors are causing increased mortgage defaults: new laws about how refinanced loans are categorized and a nationwide credit crunch.

When loan defaults spike at the same time that an economy shows signs of improving, this is a sign of a final cleanup of some loans that should have never been granted in the first place.