The bursting of the real estate bubblewhich triggered credit delinquency, caused a change in the protocols of financial institutions before a delay in the payment of installments by the mortgage debtors. Thus, regardless of whether the entities have signed the Code of Good Practices for vulnerable clients, both the one from 2012 and the one aimed at rescuing middle-class mortgagees, are in charge of offering solutions for those clients who are left out of these shields.
Precisely, the chief executive officer of Banco Sabadell, César González-Bueno, admitted, during the press conference to present the results, that the bank is showing special sensitivity to customers with problems and offers them different solutions. “We treat case by case,” explained the manager, who also stressed that with this, “the interests of the entity are defended because the bank is not interested in the customer losing their home, nor is it convenient for them to keep it”.
From other entities they also admit that they are following these protocols, with multiple alternatives. One of them may be to offer the home to another interested client, so that the debt can be repaid. With the money obtained, the mortgaged person can pay the outstanding balances and at the same time receive some money that allows him to face a cheaper purchase or opt for rent.
This is just one example and other solutions -for all clients and not only for those protected by the Codes of Good Practice- are very similar to those agreed for vulnerable or at-risk groups. From refinancing, looking for better conditions, going through moratoriums, in which it is allowed to request the deferral of the mortgage payment, which includes both interest and capital, going through applying deficiencies in the loan. In the latter case, the payment of interest, capital or both is deferred. Although in any case, it is the bank, upon request, who studies and analyzes it. In this sense, González-Bueno reiterated this Thursday that “any circumstance of someone with payment difficulties is attended to regardless of whether or not they fall under the umbrella designed by the Executive.”
A different scenario from the financial crisis
However, the bank also recognizes that it does not you are in the real estate crisis scenario not even close, since they remember that the new mortgage production of the last two years has been made, mainly, at a fixed rate. The latest statistical bulletin of the Spanish Mortgage Association (AHE) shows that the growing trend that this type of credit has been registering for more than five years has continued. Thus, we see that loans at a fixed rate have come to be around 8 points above the proportion they maintained a year earliersince specifically they represent 29.5% of the balance in force as of June 2022. This movement shows a behavior of prudence and risk aversion on the part of consumers supported by the very favorable financial conditions of recent years ”, they point out from the organism.
Also and after the previous financial crisis caused a change in the ‘loan to value’ of operations of mortgage financing by banks. According to the AHE, “the trend shows greater rigor in risk policies as the years progress, also partly favored by the expansive real estate cycle of recent years. Thus, in the second quarter of 2022 (last published report) barely 10% of the portfolio balance was made up of operations with an LTV greater than 80%, almost 2 points less than the same period of the previous year and more than 3 points. less than five years ago”.
Change of sensitivity for banking
Financial sources acknowledge that behind these initiatives there has also been an internal evolution, in which many of the ways in which they acted before the awareness process that produced the financial crisis have changed. In 2012 alone, and according to data from the Bank of Spain, 32,490 homes were handed over, of which 43% were through dation-in-payment (just over 14,000 homes), while judicial deliveries exceeded 14,000.
Regarding the measures included in the Codes of Good Practices, they range from a 5-year grace period, debt relief and dation in payment for those mortgaged with incomes below 25,200 euros. For debtors of measured classes, with income of up to 29,400, the change of mortgage from variable to fixed rate is also contemplated.
