Barrier for mortgage loans
One in every three taxpayers (about 2.1 million) who declares an income of up to 5,000 euros per annum does not have access to bank loans for house purchase, as by definition they lack the ability to service a mortgage.
Also, the chances are limited for another 1.3 million taxpayers who declare an income of €5,000-10,000 and who, even if they passed the bank’s credit criteria, it is doubtful whether they would be able to service their mortgage without problems and delays.
Given that the installment of an average mortgage loan of €100,000 with an interest rate today of 4.1% and a repayment period of 30 years is €483 per month – i.e. €5,796 per year – its servicing requires all or more than half of the income of half the taxpayers in the country.
Bank practice obeys the basic rule that a taxpayer with a net family income up to €5,000 cannot get a mortgage and earners of €10,000 can receive a mortgage loan of just €85,000.
Therefore those able to request a housing loan is limited to the remaining 3.1 million taxpayers – out of a total of 6.5 million – who, based on tax office data, declare an income of at least €10,000.
