The sector expects a much lower rise in defaults than in the previous crisis, despite the rapid deterioration of expectations for 2023
The major bank is wary of Spain’s economic evolution in the coming months, but rules out a ‘shock’ like that of more than a decade ago, when arrears were completely unchecked by the accumulation of non-payment of mortgage installments and consumer loans. customers. The forecasts handled by the financial groups go through an increase from that default percentage, yes. But in an “acceptable” context within the usual boundaries in which the industry moves.
That is the position the banks will take when they are about to align their budgets for the following year. It is clear, according to several industry sources, that a phase is approaching where interest rates will rise. And this will mean that the terms of the credits will also increase, after at least more than a decade. From then on, the evolution of non-performing loans will largely depend on that of the labor market. If too many jobs are not lost, as was the case in the previous crisis, household income should not be so affected by the unfavorable price situation and the slowdown in GDP. And when that happens, the margin to continue with the credits will be flexible enough to avoid defaults.
These forecasts are the forecasts used by the sector at a time when the Euribor has not stopped setting its own records since 2009. September is about to close at an average already around 2.2%. Only this Tuesday the index crossed the 2.6% threshold in its daily rate. At the beginning of the year it was still negative, about -0.5%.
The most recent data on arrears indicates that defaults represent 3.9% of outstanding loans, according to the Bank of Spain. At the end of 2013, the same statistic was above 13.6%. Now the situation seems more bearable, despite the outlook.
In fact, all entities are warning of the rapid deterioration of the macroeconomic forecast for the coming months. BBVA president Carlos Torres believes there will be less economic growth this quarter and expects Spain to experience a “slight” recession, with negative numbers in the fourth quarter of 2022 and the first of 2023. This was announced on Tuesday. announced. at a meeting where he emphasized that Spain is in a much better situation than it was during the 2008 financial crisis, as there are no problems in the real estate sector and household indebtedness is at the European average.
In any case, Torres indicated that the economy is in a “very challenging” environment, the largest in recent decades due to the uncertainty registered after the pandemic and with the invasion of Ukraine, which has sent prices soaring.
To cope with this phase, the government and the bank are meeting to try to agree on measures to protect the households most affected by the rise in interest rates, provided they belong to the vulnerable group. There, the college wants to ‘strengthen’ the application of the code of good practice to try to help households that may have a more difficult time in the coming months with the repayment of their mortgages. It would be about pushing the limits with which a house is now protected by that regulation that almost all Spanish banks accepted at the time.
This text, which dates from 2012, makes it possible for the bank not to charge default interest that is higher than the standard rate plus 2% on the outstanding capital; benefit from a debt restructuring plan to cope with the repayments, with adjustments that must withstand a minimum of five years of capital shortage, an interest of Euribor plus 0.25 during the grace period and an extension of the 40-year mortgage term.
On the other hand, the president of CaixaBank, José Ignacio Goirigolzarri, announced on Tuesday that MicroBank will provide 3,500 million euros in social impact financing until 2024, 34% more than in the period 2019-2021, to more than 413,000 vulnerable families. , entrepreneurs and micro-enterprises.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
