ASSESSMENTS

The Political Risks of Europe's Worsening Mortgage Crisis

Aug 21, 2013 | 10:17 GMT

Signs posted by anti-eviction activists in Baracaldo, Spain, on June 5.

(RAFA RIVAS/AFP/Getty Images)

Summary

With joblessness rising and incomes declining, homeowners across Europe are increasingly falling behind on mortgage payments, among other debts. Such delinquencies are threatening European banks, which in many countries are constrained by tight foreclosure restrictions and other factors that have made it difficult to enforce repayments or recoup losses. The problem has been made worse by homeowners exploiting foreclosure freezes by prioritizing other payments over their mortgages. Home ownership is a tricky political issue, however, and loosened foreclosure regulations could spark severe unrest. As a result, EU governments are struggling to strike a careful balance between the needs of their people and those of their troubled banks.

EU governments are struggling to strike a careful balance between the needs of their people and those of their troubled banks....

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