The Governor Of The Bank Of Spain Does Not Believe It Is Necessary To Extend Mortgage Support

Spanish Prime Minister Pedro Sanchez announced last week that the annual income threshold for mortgage relief support would be increased to 38,000 euros ($41,283) under the new coalition government. This is one of a series of initiatives designed to assist families in managing the increased costs of borrowing.

De Cos stated at a financial event in Madrid, "In this central scenario in which the economy is still slowing but could recover in 2024, we see no need to amend the code of good practise."

As per a revised industry-wide code of good practise, it is now mandatory for banks in Spain to offer mortgage assistance to economically disadvantaged households with an annual income of no more than 25,200 euros.

Additionally, additional protection would be extended to middle-class families at risk of defaulting and earning less than 29,400 euros per month.

The homeownership rate among the Spanish populace stands at approximately 75%. They are among the most susceptible to an increase in interest rates, as variable rates apply to approximately 70% of their over 4 million outstanding mortgage loans.

As of August, the mean mortgage expense in Spain has increased to 3.84%, from 2.03% during the corresponding month in 2022.

The Spanish government authorised mortgage relief assistance for over one million vulnerable households in November 2022. However, according to data from the Bank of Spain, the number of requests for such assistance in the first seven months of 2023 stands at a mere 42,000.

"Based on our observation that usage remains restricted, we conclude that the economy has been operating satisfactorily. Everyone has been taken aback by the robustness of the labour market, De Cos stated.