Spain to Let Some Defer Mortgage Payments

As its economy is hit hard by the global economic downturn and the country has the highest unemployment rate in the European Union, Spain just announced a new program to allow out-of-work homeowners to defer payments on their mortgages. Prime Minister José Luis Rodríguez Zapatero announced a new stimulus package that would also include incentives for employers to hire those who are out of work.

 

The mortgage relief program will allow unemployed homeowners as well as some retirees to postpone payment on half of the monthly mortgage for two years beginning in January, 2009. The maximum amount that a homeowner will be allowed to defer each month is €500. The offer will apply for mortgages of up to €170,000 and could affect some 500,000 people.

 

The European Commission said recently that it expected the Spanish economy to shrink next year by 0.2 percent. Spain's unemployment is already the highest in the European Union with a rate over 11 percent in the third quarter. The commission expects it to rise to 15.5 percent by 2010. In an effort to persuade businesses to hire those now receiving benefits, Zapatero said the government would pay companies €1,500 a year for each job given to an unemployed worker supporting a family. He also said bonuses would be introduced for companies hiring people in research and development and in renewable energy