Although it may be surprising given the brutal escalation of the Euribor From December 2021 until just a few weeks ago, the unpaid or at-risk mortgages The default rates of Spanish banks have not increased due to the rise in interest rates, quite the opposite. Loans for purchasing a home in situation problematic -the sum of defaulters and those at high risk of non-payment- stood at 36,359 million euros at the end of June, according to the latest data from the Bank of Spain. The figure is, in fact, slightly lower -in 85 million and 0.23%- to that registered in March 2022the month before the Euribor entered positive territory for the first time in six years.
The mortgages of dubious collectionthus, they were located before the summer in 10,944 million, somewhat above the first quarter (343 million and 3.2% more), thus breaking its downward trend. However, they are still notably below their March 2022 level (2,741 million and one 20% less). Furthermore, mortgages in special surveillance due to their high risk of non-payment have increased compared to the first quarter of last year (by 2,656 million and 11%), but in June they fell compared to March to 25,415 million (394 million and 1.5% less).
The fact that the amount of problematic mortgages has not increased in the current context could be, in principle, a good news. But the Bank of Spain no credit. On the one hand, because each rate rise official interest rates of the European Central Bank (ECB) takes between 18 and 24 months in deploying all his effects, and 10 were produced between July 2022 and last September. And on the other hand, because households are slow to stop paying mortgages some two years on average since they have suffered a notable drop in their income, usually due to the job loss. At the moment the labor market is resisting and the Euribor has begun to fall because the markets anticipate ECB rate cuts in 2024. But it remains to be seen how family finances fit into the growing slowdown of the economy European.
Plan for the mortgaged
This possible increase in payment problems of customers is one of the reasons given by the Government for expand the aid plan to those mortgaged in trouble that was agreed with the bank in November 2022 and that at the moment is having many fewer requests than expected. As this newspaper reported, the vice president Nadia Calvino is going to meet this Monday with the banking employers and the Bank of Spain to extend the suspension of commissions for changing mortgages to 2024. variable to fixed rate and of early repayment effective in 2023. It also aims to raise the income threshold of families who can to benefit of the Code of Good Practices for mortgage relief for middle class households, from the current 29,400 euros (3.5 times the IMPREM) to the “middle income” (37,800 euros).
Both the Bank of Spain and the financial sector have been expressing their rejection to bliss extension of the plan on the grounds that it is too premature. However, the body governed by Pablo Herández de Cos has also been urging banks to be prudent and take advantage of the increase in profits that the rise in the Euribor has brought to reinforce your capital and provisions. Its objective is to increase its capacity to resist the foreseeable increase in delinquencies. Since the banks do not seem to have paid much attention to her until now, the deputy governor, Margarita Delgadoraised the tone a few days ago and warned that “there is no anticipation” on the part of the entities, significantly at an event organized by the AEB banking association.
Wake up call
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The number two of the Bank of Spain based her criticism, precisely, on the reduction of credits to homes and businesses in special surveillance in Spain and the euro zone. “This may make us reflect on whether entities are adequately capturing through their information systems early warning the deterioration of economic and financial conditions. Under the current circumstances of economic slowdowneven a technical recession in some European countries, it would be expected that this segment of borrowers would be larger, or at least that its weight in the total would increase,” he warned.
According to data from the European Banking AuthorityEuropean banks have reduced their set of loans under special surveillance by 5.8% from the maximum of last September, to 1,431 billion from last June. Spain is the fifth of the 30 countries that analyzes the EBA with a percentage of credits in special surveillance on total loans lower (6.8% compared to an average of 9.1%), but the seventh with a higher rate of late payment (2.9% vs. 2.1%). In the sum of both components, the country has a credit rate lower problematic than the average (9.7% compared to 11.2%), but with a coverage -weight of the piggy bank of provisions on said assets- highest (51.7% vs. 48.3%).