The Government has returned to demagogy with mortgages and has done so, in a hurry, with night and trying to divert attention about the controversies that are raging against the Executive, thanks to the change in the crime of sedition and the famous law of the only yes is yes that is taking rapists out of jail.
Something had to be announced and done quickly and Calviño stepped on the accelerator to impose a minimum agreement on the bank employers, to which all the large entities have not yet adhered: The announced objective: alleviate the sharp rise in mortgages due to the rise in the Euribor to the middle and lower classes. However, the small print of the measures presented is far removed from the reality of the Calviño’s propaganda objective.
Measures
Modification of the Code of Good Practices for vulnerable families
These measures are aimed at households that earn less than 24,300 euros a year and for whom the mortgage payment represents 50% of the income. The measurements are:
- Five-year grace period on loan principal
- Interest on principal falls from Euribor +0.25% to Euribor +0.1%
- The life of the loan can be extended up to 7 years
- They may restructure the loans on more than one occasion
- It allows payment in kind, but it is extended from 12 to 24 months from the date of application.
Creation of a new Code of Good Practices for middle-class families
These measures are aimed at families who earn less than 29,400 euros a year, whose mortgage represents more than 30% of the available income and for whom the Euribor change has led to an increase in the fee equal to or greater than 20%. The measurements are:
- Grace period of one year on the principal of the loan
- Principal interest below the market average
- The life of the loan can be extended up to 7 years
Complementary measures for all households
- Commissions are eliminated to facilitate the conversion from variable to fixed mortgage in 2023
- Fixed conversion cost reduced from 0.15% to 0.05%
- Commissions are eliminated to favor early amortization
- The Bank of Spain is entrusted with a guide with all the measures
the fine print
So far the measures announced by Calviño. Now, let’s look at the fine print. According to Calviño, these measures will also help the middle classes. Is a family that has a gross annual income of 30,000 euros a year an upper class family? This is one of the problems with the classification of measures by salary ranges, that the line that divides the measure leaves out most of the Spanish middle class. What’s more, there are 4 million Spaniards whose salary range ranges between 30,000 euros per year and 60,000which we could openly consider to be the Spanish middle class.
In other words, not only is Calviño lying when he says that these are measures that will alleviate the middle class, but he is leaving out no less than 4 million consumers.
Mortgages become more expensive
In addition, the measures related to the grace periods of the mortgages could make the loans more expensive mortgages up to 10,000 eurosaccording to the calculations of a real estate portal specialized in the search for mortgage loans (iAhorro).
The specialists also recall that the only of the measures adopted that could offer some advantage is the reduction in the interest rate to -0.1%. Everything else was already covered
The grace periods and lengthening the life of the credit will cause an adverse effect on the price. These two measures will make credit significantly more expensive and ultimately cause the client to end up paying more. High amounts, depending on each of the loans.