CC OO proposes to facilitate the transition to fixed mortgages in order to absorb the increase in the Euribor

Date:

The union is calling for the code of good practice agreed between banks and the government to be extended to more beneficiaries as interest rates continue to rise

The unstoppable rise in the Euribor, whose growth has further strengthened since the European Central Bank (ECB) decided on Thursday to raise interest rates one more step to 2.5%, has led Comisiones Obreras to propose a new proposal to of monthly payments to protect households with mortgages. The syndicate has submitted a proposal to accelerate the transfer of variable credit to fixed credit in a structural manner in the banking system, as well as an extension of the recent Code of Good Practices approved by Congress last week.

Specifically, CC OO proposes to “guarantee automatic renewal of debt at a fixed rate” so that the banks themselves offer this change to customers with a variable mortgage “with the mortgage terms that the entity offers with the same or similar risk profile for new mortgages” . The organization admits that this change could, if necessary, include an extension of the credit term to compensate for the transfer, although this would not require government assistance.

On the other hand, the union’s proposal advocates guaranteeing by means of a legal standard the possibility of changing the term of mortgages so that the installments are at “acceptable levels”, that is to say that the monthly payment is not higher than 30% of each family’s income, extension of the amortization period. In addition, it calls for a “maximum objective interest rate reference” linked to the cost of Spain’s long-term debt.

It also calls for reform of the recent Code of Good Practices approved by Congress and agreed between banks and the government, expanding the number of people covered by this protocol. In particular, it calls for increasing those potential beneficiaries by establishing an income limit of up to four times the IPREM (compared to three times the current IPREM); and to be able to choose to convert the debt to a fixed interest rate with a maximum effort on income of 30%.

Just this Monday, Vice President of the European Central Bank (ECB), Luis de Guindos, described as “reasonable” that governments take steps to try to mitigate the impact on mortgage costs of interest rate hikes at a time of economic crisis . delay like the current one. In an informative breakfast organized by the New Economy Forum, the former Spanish economy minister recalled that the mortgage situation in Europe varies greatly between variable and fixed interest rates. “I think it is reasonable to try to ease the cost of the rate hike in a situation of slowing GDP and high inflation like the current one,” said the ECB vice president, emphasizing that he thinks it is “reasonable to the Code of Good Practice.”

The first step that the Euribor took after the interest rate increase by the European Central Bank (ECB) was to climb a new step, reaching the 3% limit. The banking indicator, which is most commonly used in Spain to calculate variable mortgage payments, rose from 2.86% to 2.99% this Friday. It is the highest level since January 2009. This Friday was the most direct reaction to an increase in the official money price that, as envisioned by ECB President Christine Lagarde, could be much more intense and sustainable in 2023.

Until last Thursday, the Euribor was almost paralyzed pending the monetary authority’s decision, ending the week with a preliminary average of 2.86%, well above the negative reading close to the -0.502% lows of just one year ago, which makes the mortgages to switch more expensive again.

With an average loan of EUR 150,000 for 25 years with a difference of 1% compared to the Euribor, the monthly payment will increase from EUR 531 to EUR 780, which means EUR 249 more per month and approximately EUR 3,000 more per year. If the amount is 180,000 euros, the bill to pay will go from 638 euros per month to 937 euros, with an increase of 299 euros per month and 3,588 euros per year

This Friday, the ECB raised official interest rates by 50 basis points to 2.5%. While the rate of increase is softer than at the two previous meetings, when the increase was 75 basis points, due to the moderation in inflation, the institution insisted on the message that it will continue to fight against inflationary pressures. The consensus, which had predicted official rates to be a maximum of 3%, is now adjusting its forecasts and already targeting 3.5%. The Euribor is expected to rise further in the coming days.

Source: La Verdad

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Subscribe

Popular

More like this
Related

Fight in Atlantic City – Aslan for UFC debut: “I’m ready, despite the pressure!”

The Viennese Ibo Aslan was only the second Austrian...

Eight-year-old boy is the only survivor of the bus crash in South Africa that left 45 victims

The accident occurred last Thursday morning when the bus...

Fall into a ditch – Germany: Next serious accident involving a coach

Another serious bus accident occurred in Germany on Friday...