04 Jan 2012 5:10 PM:

I think anyone with a Euro mortgage should be asking exactly this question.  To pretend that there is no chance of a Spain exit - or even a complete collapse of the whole structure - is the planning equivalent of sticking your fingers in your ears and going "lalalalalalalala!".  The fact that the Germans have been printing Deutch Marks for months now should be a hint! 

Of course it's a possibility; a very real one, and I for one am making sure I've worked out the implications and setting my stall out to mitigate the risk (or maximise the gain).

Looking at Spain's situation: 45% youth unemployment and 24% overall - you do have to wonder how else they are going to survive apart from defaulting and/or reverting to the Peseta and devaluing.  More debt is not the solution.  And if they do 'go it alone' I think a 30% devaulation is very optimistic; 50-60% seems more likely to me.

I think the outcome depends on your situation and objectives.  I have a relatively high mortgage to value (seven years of payments cancelled out by depreciation!) but I have long since given up on any hope of a profit from my investment.  Now my aim is to own my house at the smallest cost.  From that point of view I am keeping as little cash in Spanish banks as possible. 

The parallel question is this: what happens if the bank holding your mortgage... and therefore your deeds... collapses?  Not so sure about that.

Thread: What would happen to a Euro mortgage, if Spain dropped the Euro?

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