Italian banks to freeze mortgage payments for unemployed

08:39, October 22, 2009      

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The Italian Banking Association (ABI) on Wednesday decided to allow mortgage holders who are in serious economic difficulty to suspend payments for up to one year.

Local media said the measure will go into effect in January and will apply to three categories of mortgage holders who are now unemployed following the economic downturn.

To benefit from the payment deferment mortgage are holders who have simply lost their jobs, who are on temporary lay-off plans, who were self-employed but have fallen out of business and who have lost family members whose income supported the entire family.

"We have drafted a program to help households and will discuss the measure with the various involved authorities like the Italian government and the consumer associations," said ABI President Corrado Faissola.

The Italian housing market was not severely hit by the financial turmoil because of its limited reliance on mortgages. However, many low-income families rely on mortgage payments for new house acquisition and the number of jobless Italians has risen in recent months.

According to Italian National Statistics' Office (ISTAT), Italy's unemployment rate was relatively high in 2008 at 6.8 percent and is expected to rise to 8.4 percent by the end of 2009, reaching 10.7 percent in 2010.

The percentage of Italians who get jobless aid or benefit from reduced hours schemes to keep them in work is 40 percent of all unemployed workers, compared with 73 percent in Spain, and 97 percent in France.

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