ERC asks to refinance mortgages to the middle class and ‘cap’ the changes to the fixed rate
The main partner of the Government in Congress, Republican Left of Catalonia (ERC), amends the banking proposal to the Ministry of Economy. Catalan nationalists believe that the royal decree amending the Code of Good Practices -which would offer refinancing to vulnerable people if their interest rate rises by at least 30%- It is insufficient and they ask that it also be extended to the middle class. In addition, it proposes that financial entities facilitate changes from variable to fixed rate by means of a ‘cap’ so that banks are not ‘tempted’ to apply interest that is too high.
The proposal that Caixabank would have presented – offering a moratorium on the payment of the capital for one year – is an alternative which is also seen favorably from the nationalist force. He believes that it is logical both for people who are drowning in the current ‘crisis’ and for financial institutions, which, in the end, seek to keep their clients solvent.
The partners of the Government know the limit that the ceiling has on mortgages. They know that it is technically objectionable and that it opposes the market, but they also remember that the responsibility of the Executive is to prevent bank usury. The discussion moves, according to them, in two scenarios. First, that focuses on all those who cannot pay their mortgage today, it revolves around freezing fees for the vulnerable. The second, on the other hand, is aimed at the middle class. In other words, to all the households that can pay, but that need a little help at certain times, as happened during the coronavirus pandemic.
And there, the range of possibilities goes from the aforementioned limit to the renegotiation of the conditions for a change from a fixed to a variable mortgage, to the possibility of saving the debtor the cost of the notary’s office. It is insisted that we must not leave the bank take the pan by the handle in this negotiation and opt for measures that are not considered Bolivarian, but common sense. However, from EH Bildu, the other partner of the Government, measures that go further are demanded. Without going any further, they demand a cap of 0.5% on variable-rate mortgages.
Within the coalition, measures are also requested, although they are not specified. The second vice president, Yolanda Díaz, assured yesterday that “there are reasons of morality” to help mortgaged families, after ensuring that interest rates are “provoking the largest transfer of income from citizens to financial institutions.” The conditions of the agreement between the bank and the Government of its latest agreement are reduced to family groups whose income does not exceed 24,318 euros per year and that, after reviewing rates, the mortgage payment exceeds 40% of the net income of the family unit.
The royal decree that would include these modifications in the Code of Good Practices, to which the bank can then join or not, must first be approved in the Minister council and then validate in the Congress of Deputies. If the Executive wants to achieve that definitive green light for its decree, it must first convince its legislature partners. These, however, hold their swords high and fear that the Government will use again – as it has done on other occasions – the decree to include in it measures of social significance with which to pressure and force the yes of its partners.
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