As predicted, the LTV figures on the banks' books are a crock. Or as Oliver Wyman puts it rather more diplomatically, "potentially latent risks not recognized in the banks’ balance sheets, such as outdated house price valuations that are not correctly reflecting present property values". Overall the banks are admitting 62% LTV, which Oliver Wyman thinks should be between 85% (base case) to 99% (adverse case) at 2012 - 2014 OMV. Lenders in Spain are limited to lending a maximum of 80% of a property's value - if OMV drops below this, borrowers are liable for the shortfall, and all of their assets are included in the liability.
However, some economists think even the awful figures revealed in the report don't reflect the true scale of the problem. The NYT published a piece on the 24th, four days before the report's release, the predictions of which are not inconsistent with the official report, but with a harsh conclusion;
And the impact on troubled Catalunya? Not good:Borja Mateo, author of a recent book on the Spanish real estate market, said there were now 1.9 million housing units for sale in Spain and about 3.9 million that could go on to the market in the coming years. With current housing demand now at about 175,000 units a year, Mr. Mateo predicted the glut would cause home prices eventually to fall by 60 percent (OW predicts -30% between 2011 - 2014 - ed). Because the typical Spaniard has 80 percent of his or her assets tied up in real estate, a plunge in prices of this magnitude would be devastating. “What we are seeing,” he said, “is a massive impoverishment of a country.”