This is the average of the 23 countries covered by RE/MAX Europe’s European Housing Trends survey.
According to Euronews, referring to the study, when mortgage borrowers have to cut back on spending or give up spending altogether for the sake of loan payments, priorities vary from country to country. Most often they save on going out, luxury goods and vacations.
In the 23 countries studied, about 25 percent of mortgage borrowers “have never had to cut back on spending, look for alternatives or forgo purchases to afford a mortgage, ” the RE/MAX report said.
The figure ranges from 7% in Malta and Romania to 44% in the Netherlands, implying that almost half of loan borrowers in the Netherlands are confident of meeting monthly payments. Lithuania (42%), the UK (37%) and Switzerland (36%) are also among the countries where mortgage borrowers are relatively comfortable:
At the same time, the proportion of mortgage holders who did not need to cut back in order to make their payments on time is less than 15% in a number of countries. From this we can conclude that mortgages are difficult for the majority. According to the report, we are talking about countries such as Malta, Romania, Hungary, Ireland, Turkey, Slovenia, Greece, Croatia and Italy.
Among Europe’s five largest economies, the UK has the highest rate (37%), noticeably above the average of 25%. Next come Germany and Spain (22% each), France (21%) and Italy (14%).
The first things people give up are activities such as dating, going to the movies, festivals, clubs and bars. 41% of all mortgage borrowers said that at least once they decided not to go out to save on payments.
In second place are luxury goods, such as premium food and alcohol, and branded cosmetics. 38% of those paying off their mortgages cut back on spending on them or stop buying them altogether. The third place is vacations.
Almost three out of ten (29%) respondents have at least once cut back on spending on clothing purchases or abandoned them altogether. Next in line, according to the survey, are electronics, subscription services, hobby products, sporting goods, classes and gym memberships, and everyday items like groceries and basic hygiene products.
The choice of what to cut back or stop buying for the sake of mortgage payments varies greatly across countries.
For example, in Greece, Hungary, Romania and Turkey, borrowers tend to cut back on essentials ahead of time because of the high pressure on family budgets. In contrast, mortgage holders in the UK, the Netherlands, Switzerland, Lithuania and Luxembourg cut spending more gently and selectively, often avoiding austerity measures that could significantly affect their lifestyles.
Luca Bertalo, Secretary General of the European Mortgage Federation, said there is an important policy debate on housing affordability and mortgages.
He explained that some countries mainly use fixed-rate mortgages, while others are more likely to offer variable rates, where the interest changes every month. “This also has to do with the peculiarities of a country’s financial infrastructure,” he told Euronews Business.
“In Germany, and now in Spain, there is a trend towards more fixed-rate mortgages, “ he added.
However, Bertalo believes that the problem of mortgage affordability is not the type of rate, as the lending system is quite transparent and borrowers are able to properly assess the situation and risks. In his opinion, the biggest risk for families is in the cost of electricity. This is something that the family has no control over.
