2023-07-08 09:46:08
“The summer is going to be hot and the balances are going to skyrocket, because there are declines in some types of consumption but not in those related to tourism, and we will have to see how the numbers come with the start of the course,” he predicts Antonio Luis Gallardo, economist from Asufín (Association of Financial Users).
The data on credit contracting disseminated by the Banco de spain point to an increase in the indebtedness of family economies through the financial products that are most burdensome for them, such as consumer loans – whose demand to attend economic emergencies tends to grow on the eve of holidays and times of consumption such as the return to school and Christmas-, credit cards and revolving.
Contracting for this type of product reaches a rate of 390 million per day in the case of cards and slightly more than 96 in policies, which means a combined rate of more than 24 per hour.
These are the easiest ways to access money in case of need, although they are also the products that generate the greatest profitability for financial institutions and, at the same time, those that entail the greatest economic demands for their clients.
One in seven mileurista households gets into debt
Debt is usually caused by not having savings
Are there many consumers willing to borrow? The Confidence Index of Consumer (ICC) prepared by the CIS (Centro de Investigaciones Sociológicas) reflects how in the homes of 5.8% of those surveyed “it is difficult to make ends meet, which is why they have had to contract debts”.
This rate, which reached 6.6% in March and is at levels similar to those of the previous four years, when in May it fluctuated between 4.5% and 5.6%, suggests that slightly more than One million homes are in this situation.
This option of borrowing -normally caused by not having savings, which is the resource that one in eight Spanish families have been throwing away for some time- is higher among lower-income households.
In this sense, the average rate of 5.8% shoots up to 14.9% (one in seven) in households that are forced to spend the month with less than a thousand euros and rises to 8.5% among those who enter between a thousand and 1,800, to clearly descend above those income levels.
The highest interest in the last decade
The latest data from the issuer, closed in May, place the average interest rate at which the contracting of consumer loans was closed at above 9% (it has been since March), an interest rate that is closer to tripling than doubling that of mortgages (3.71%) and that is slightly more than 50% higher than overdrafts (6.04%).
That price of consumer credit in Spain since the beginning of the year is the highest in the last decade.
At the same time, the average interest on credit cards and revolving cards is 18.09%, between two and three points below the 20% and 21% that it reached between 2014 and 2018, when they began to go to court. lawsuits against the entities that placed these products.
The debit balance of customers in ‘revolving’ cards was close to 12,000 million euros in May
However, the Supreme Court ended up establishing a few months ago the usury border in a gap of six points on the average interest of the cards that are marketed in Spain, which opens the door to guarantee the legality of interests of up to 24%. when, in any case, the average surcharge is already three times that of overdrafts and almost five times that of mortgages.
It is a complex financial product in which these high interests are applied to a debt (the money spent) of which only the previously established percentage or amount is settled each month, while the rest accumulates, which gives rise to a ball that does not stop growing.
Despite the burdensomeness of these conditions, the debit balance of customers in revolving cards was close to 12,000 million euros in May while the contracting of consumer loans in the last twelve months once again exceeds 30,000, volumes that are not They gave since before the pandemic.
“You have to assess the risks generated by these debts”
“The revolving, credit cards and consumer loans are what is marking the incipient wave of delinquency that is taking place in the Spanish economy,” says Gallardo.
Judges often dismiss the lien on the debtor’s home and direct liens on wages
The economist draws attention to how “all debt generates a cost, but this can be positive if there is an opportunity cost”, such as the purchase of a necessary household appliance.
However, this opportunity cost is often unrelated to operations that are financed with credits of these characteristics: “The risks generated by this type of debt must be assessed. The debtor responds with all his present and future assets”, but, Despite this, “sometimes these short-term credits overlap and end up generating a snowball effect that is very difficult to manage.”
Financial institutions, for their part, have chosen to adopt more aggressive procedures when it comes to collecting debts, given the frequency with which these episodes of over-indebtedness to default occur, something that, Gallardo notes, also has the purpose of “sending a notice for delinquency”.
These procedures sometimes include lawsuits in which they request the court to seize the debtor’s home, although, when dealing with debts of a few thousand euros, judges usually rule out this possibility and direct the seizures to salary, eventual tax refunds and , if any, to income of another type such as rentals.
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