The industry is focusing its discussions on the possibility of changing the requirements currently set by the code of good practice to define the vulnerable customer
The sudden escalation of the Euribor has led to an almost unprecedented mobilization of the financial sector to find a solution together with the Ministry of Economic Affairs for families who cannot cope with the increase in their mortgages.
The proposed measures range from the application of moratoriums on principal to the complete freezing of installments for a period of 12 months. But, according to sources from the negotiations, the focus of discussion today is on determining the type of customers to which the final proposal chosen will apply.
It is already known that aid goes to vulnerable families. “The problem is that due to the characteristics of the current crisis, there may be households that do not currently meet the requirements to access the support provided through the industry code of good practice,” they indicate from the sector .
The data processed by the Bank of Spain is eloquent. The regulator estimates that there are currently one and a half million highly indebted families – who use more than 40% of their income to pay financial burdens – after adding 350,000 since the start of the pandemic.
Banks agree that the vulnerable profile has changed in this crisis, with households having seen how inflation has ruined their budgets, making month-end saving almost a miracle after the surge in basket or basic services such as electricity or gas. Changing the definition of vulnerable is therefore crucial. And this is where the discussion seems to have stalled.
The sector is currently refusing to quantify the outstanding balance that could benefit from the future support plan. But in general, it is estimated that the loans most sensitive to the sudden rise in the Euribor are mainly the variables signed in the last five or six years, bearing in mind that it was in the early years of the Euribor. loan is when more interest is paid
Currently, the code of good practice defines vulnerable families whose income does not exceed the threshold of three times the IPREM (EUR 6948.24 per year) or those who, in the four years prior to applying for the aid, “have undergone a significant change in their financial circumstances. This means that the effort involved in the mortgage burden has increased by at least 1.5 times.
Circumstances of special vulnerability are also understood when the installment amount exceeds 50% of the family income, as well as large families, single-parent families with dependent children or those with one of their members with a disability of more than 33%, among others. other assumptions.
Attempts to restructure the mortgage through this code in any case fail several times, mainly because the requirements are not met. According to the statistics of the Compliance Checking Commission, the bank received 7,870 requests last year to achieve this goal. Of that number, only 2,283 were restructured and only four were relocations. Another 45 ended up in payment.
A lot is played on the couch. No entity wants to increase its delinquent portfolio, having survived the pandemic with limited default rates compared to the most dismal projections pointing to more than 10% at the worst moments of the crisis.
Specifically, the industry backlog is currently about 3.8%. And no entity wants to increase provisions to deal with this potential risk. Especially given the recent warnings from the European Banking Authority (EBA), which indicated in a report published this week that 15% of mortgages in Spain are currently sensitive to the rise in interest rates and the expected price correction in the real estate market (17% in Europe ).
There is also a firm belief within the entities that they cannot afford to repeat past mistakes that resulted in a serious reputational crisis that even entailed a certain financial risk for them. For this reason, negotiations are expected to accelerate in the coming days to present the final agreement in the coming weeks.
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.
