SPAIN Standard & Poor, the credit ratings agency, said in a recent report that "there are few signs of recovery" for the real estate business in Spain and that it is likely to continue through 2012. There is a large stock of unsold homes and prices continue to drop, yet demand is dropping as well, it says. Interestingly, it also points out that sales of new homes is made difficult because of the incentives to banks to keep them as assets on their books, awaiting hypothetical improvement in the market, instead of taking significant short-term losses. Aside from the real estate situation, S&P also points to 'continuous deterioration' in the financial sector, particularly regarding asset quality. "The financial sector in Spain is still accumulating problem assets (...) primarily linked to the construction industry." The third quarter of this year showed mortgage arrears, which it calls "severe", up 3.5%, which represents over 60% of total arrears.