Monday 19 March 2018

Analysis: Loan cost divide highlights euro zone’s problems

European union flag
European union flag

Terhi Kinnunen and Tracy Rucinski

SAARA Merritt is excited. She and her husband have sold their house in a Helsinki suburb and taken out a cheap mortgage to buy a new, more spacious property back in her provincial hometown.

At the other end of the euro zone, Daniel Ballestero is desperate. He has tried for months to sell his apartment on the depressed outskirts of Madrid but found no buyer. If anyone can get a mortgage to buy the property, the loan will probably cost twice as much as Saara Merritt's.

Their stories reveal a paradox bedevilling the euro zone economy. People in the relatively prosperous northern nations can usually borrow easily and cheaply, while fellow Europeans in the troubled southern nations are paying much higher interest rates, if they can get credit at all.

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