Alex Trelinski
THE Bank of Spain says that debt has fallen dramatically among young people in the last 30 years because they cannot afford home mortgages.
The bank’s half-yearly family finance report says that debt for people aged under 30 has dropped from 40% of the total debt balance to just 6% over the last three decades.
In 1994, the largest concentration of debt was where the head of a household was aged under 45, accounting for up to 80% of all mortgages granted for first time buyers.
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That figure is now 42% of the overall debt total.
The Bank of Spain said: “This phenomenon reflects, to a large extent, the reduced access to home ownership of young families in recent years.”
Another factor behind the fall is that the percentage of young families has fallen.
That is down to more people staying longer with their parents and coupled with falling birth rates since the mid-seventies.
Despite higher rates of migrants, households whose main income earner is under 45 years of age represent 25% of the population compared to 37% in 2002.
While the percentage of households with a mortgage on their main home has remained stable at around 28% since 2014, age groups have changed.
At the beginning of the century, more than 50% of households with a head of household under 45 years of age had a mortgage for a first time purchase.
In 2022, that figure is only 40% while the proportion of households between 45 and 54 years that have a mortgage has risen from 32% to 42%.
“It can be seen that the debt of younger households has been transferred to middle-aged households,” the survey says.
The Bank of Spain says indebtedness is generally linked to the life cycle.
When a household is young, it usually goes into debt to buy a home from its future income.
In middle age they save to gradually repay the mortgage, while in old age they have already paid the bulk of their debts.
The Bank states that a combination of problems in the real estate and labour markets points to an increase in inequality between young and old people.
Since 2011 the home ownership rate of Spaniards up to 34 years of age has plummeted by more than 25 points to 17%.
The report calculates that since 2014 the average debt per household has decreased by 25% in real terms, once inflation has been discounted.
The issue is that are now far fewer young households that can take out a mortgage and, therefore are in the ironic position of having fewer debts.
