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By Jason Webb
MADRID, Nov 3 (Reuters) - The Spanish government said on Monday it will allow unemployed workers to delay making half their mortgage payments for two years as it seeks to cushion the impact of rising joblessness and economic slowdown.
"There will be a temporary and partial moratorium on mortgage payments," Prime Minister Jose Luis Rodriguez Zapatero told a news conference, in which he also announced 2 billion euros ($2.58 billion) in speeded-up tax rebates for mortgage payers and incentives for employers.
The mortgage measure, which will also apply to pensioners with families to support, could benefit up to 500,000 families with mortgages worth up to 170,000 euros, Zapatero said.
The announcement came as the Socialist government holds talks with unions on how to combat unemployment, which hit a four-year high of 11.3 percent in the third quarter.
As the construction sites which propelled Spain's decade-long property boom close and car plants and shops lay off workers, the number of Spaniards out of work has risen by 800,000 in 12 months to 2.6 million.
The government will guarantee mortgage payments postponed under its moratorium, said the prime minister, who gave few details of the implementation of the scheme. The plan is due to be approved at a cabinet meeting on Friday, when more details are expected to be released.
Analysts were unsure whether the government was asking banks to shoulder some of the burden of the economic slowdown, following its commitment to assist financial institutions with a fund to buy assets from them and with state guarantees for bank debt.
"This measure might slow down a little the rise in non-performing loans, which is a good thing, but it's hard to say what it's overall impact will be without details," said Xavier Segura of savings bank Caixa Catalunya.
Banco Sabadell
SUBSIDY FOR UNEMPLOYED WITH FAMILY
It was not clear what would happen with the interest which would normally accumulate on the delayed payments.
Neither of Spain's two biggest banks, Santander
Zapatero also announced a 1,500 euro subsidy for companies to hire unemployed workers with families as part of a 170 million euro package to stimulate the struggling labour market.
Also, many workers who currently qualify for tax rebates on mortgage payments will be able to pay less tax in the first place instead of waiting to get their money back after handing in their declaration, the prime minister said.
"The government's top priority in these difficult economic times is assisting workers and families in most difficulty," Zapatero said.
But while the measures will grab headlines, on a day when the European Commission said Spain's economy will contract by 0.2 percent in 2009 and barely grow the following year, economists were unsure of how much difference they would make.
"The numbers (in terms of money) here are moderate, so I don't think this will have such a big impact on companies and markets," said Nicolas Lopez, head of analysis at brokerage M&G Valores.
Other government measures to tackle the crisis have included a 38 billion euro fiscal stimulus package, the creation of a fund worth up to 50 billion euros to buy assets from the banks and state guarantees for up to 100 billion euros in new bank debt both this year and next.
While Spain's banks have withstood the financial turmoil better than their peers elsewhere, households and companies are heavily indebted and economists say its current account deficit running at 10 percent of gross domestic product is unsustainable. (Additional reporting by Ben Harding, Manuel Maria Ruiz and Jesus Aguado; Editing by Victoria Main)