bThe rise in rates promoted by the European Central Bank has led the Government to sit down with the banks to negotiate measures to alleviate the situation of many families who have seen the cost of their mortgages increase in recent months.
Podemos and some opposition parties have taken their proposals to Congress with measures that range from establishing a temporary cap on the rise in variable-rate mortgages, to approving a temporary and extraordinary tax deduction to offset part of the rise.
In the absence of the Executive specifying in which line the conversations are moving in the meetings with the bank that the first vice president herself confirmed, Nadia Calviño, the financial sources consulted by this means are astonished that with the current panorama they are looking for and containment measures. Thus, they recall that “the financial sector is essential for the country’s economy” and “it is not good to generate uncertainty and that it is constantly questioned.” “We are a prepared sector and everything that means reducing our response capacity is not good for anyone,” they point out.
Along these lines, they recall that in 2012 the Code of Good Practices was created , which is a mechanism that anyone can turn to if their economic situation prevents them from paying the mortgage, so that the bank will apply various measures to restructure their debt and that they can bear the fees.
“This code has proven to be effective and fundamental in a stressful situation such as the financial crisis and also during the Covid crisis.” “It has worked very well, it is very tabulated for cases of vulnerability and the banks already have very structured the different responses such as restructuring or write-offs. It is a very valid instrument to which all banks have adhered,” they explain. sources, who believe that with this tool the sector is capable of responding to problems that may arise.
One of the proposals that has created the most controversy among experts in the financial and real estate sector is that of Podemos, which wants to establish a temporary cap on the rise in variable-rate mortgages to protect vulnerable families from the rise in the Euribor.
In practice, this would mean a reduction of up to 150 euros in monthly payments. Specifically, as training sources have pointed out, the approach is for banks to compulsorily offer their clients the possibility of taking advantage of a reduction in their mortgage loans. Thus, for one year the differential of variable-rate mortgages would be 0.10%, without an increase in the repayment term of the loan.
Financial sources recall that rates were negative until recently and remain at “very low levels from a historical point of view and in absolute terms.” Therefore “We believe that it is still too early to consider any type of control measure and that it is unnecessary since we already have tools that work.”
Regardless of whether it is a necessary measure at present, Juan Antonio Gómez-Pintado, president of APCSpain, recalls that the banks for quite some time, due to the 2008 crisis, carried out a commercial action and replaced the interest rate mortgages variable for the fixed rate.
“The percentage of the mortgage portfolio that each entity has at a fixed rate is higher than that of the variable rate, 60% versus 40%, although it depends on each entity. In addition, since the variable rate mortgages are the oldest, that is, the that more amortization has been made, the amount of interest that the client has to pay is small, which is why I think that a policy of capping prices is not adequate, a postponement of that amount and making extensions seems more appropriate, explains the manager.
According to Luis Javaloyes, CEO of the Negotiating Agency, what Podemos is proposing “is unfeasible because it is illegal.” Thus, he points out that “it would be possible to change Spanish legislation to cover it, but it does not fit at all within the framework of European legislation. This has been confirmed by the Government itself.” Javaloyes points out that “it would go against the objectives of the European Central Bank’s monetary policy . The rate hike has a specific purpose, which is to stop inflation and the Member States cannot dedicate themselves to adopting measures that distort it.”
“Carrying out this measure is like eliminating the variable mortgage from the market”
Laura Martínez, spokesperson for iAhorro, also highlights “it is a bit complicated to force banks to offer this interest rate when a mortgage contract supervised by a notary has previously been signed, detailing that the mortgage that was being signed was variable and that their quotas would fluctuate based on the reference index, in this case the Euribor”. “This is the difference between a fixed mortgage and a variable mortgage. Taking this measure is like eliminating variable mortgages from the market , for that another option would be to prohibit them so that clients would never be exposed to increases in the indicator,” says the expert. .
For his part, Antonio de la Fuente, Managing Director Corporate Finance of Colliers agrees that it is ” a measure that is impossible to apply in practice and that can only be intended to capture the interest of the electoratewith the aim of gaining votes temporarily. He demonstrates a deep ignorance of how mortgage markets work “.
Thus, he specifies that “the owners of these mortgages are not the banks, they are the savers who have acquired them in the form of mortgage certificates referenced to the Euribor. Limiting the review of the Euribor would mean undermining confidence in the tens or hundreds of billions of euros in the Spanish mortgage bond market and opening the door for all these buyers to sue us in international courts (even by the ECB, which has acquired issuance of mortgage bonds).
Another of the proposals that has come to Congress in recent days was by the leader of Ciudadanos, Inés Arrimadas, who proposes “approving an extraordinary tax reduction to compensate at least part of this rise that homes and mortgages are suffering habitual residence”.
In this regard, David Gutiérrez, Financial Business Trainer at Grocasa, considers that ” the measure proposed by Ciudadanos would transfer the cost of the aid instead of to the banks, as it would be in the case of the Podemos proposal, to the State budget through a temporary tax deduction. Thus, the expert specifies that “as it does not affect financial entities, it should not affect the mortgage and real estate market”.