MLAGA, 11 (EUROPA PRESS)
The group of United We Can in the Provincial Council has presented a motion for debate in the special information commission of accounts in relation to the rise in interest rates and “relief proposals to favor working families.” Specifically, they urge the Government to approve a Royal Decree that suspends until January 2024 the review of the installments of all mortgages for regular homes at a variable rate, “that is, leave them frozen until that date, for all those families that exceed the 30% fee with respect to your income.
Also in the initiative they ask the Executive “to suspend the review and make the cost fall on the margins of the banking entities based on the money that these entities owe since the bank bailout has cost us almost 96,000 million euros until 2020.”
Likewise, they urge the Government to “negotiate with the banking entities the reduction of their enormous benefits by suspending the review of mortgages in 2023 – which is approximately 50% of their profits–“.
The spokesperson for the provincial group of United We Can, Maribel Gonzlez, and the deputy Teresa Sánchez state in the motion, consulted by Europa Press, that the ECB “continues with its roadmap of suffocating families” and they specify that “it has decided a new rise in interest rates in the euro area of half a point, until leaving the general rate at 3%, at its maximum at the end of 2008”.
“Despite the fact that inflation is subsiding, Lagarde and De Guindos insist on tightening monetary policy by increasing the price of money”, they have warned and criticized that “as the threat of economic recession has not materialized, the ECB seems to that it has decided to get down to work to get a crisis unleashed because it has also advanced that it will raise rates again by another half point in March”.
“There are 3.7 million people with mortgages in Spain. This type has risen almost four hundred basis points from December 2021 to January 2023, thirteen months and has ended last month at 3.91%”, they recalled, warning that “what the ECB is saying now is to keep tightening the noose”.
In the motion they have added that “the rise in the main reference index is causing a strong increase in the monthly mortgage payments of families that will spread over the next few months as the corresponding periodic reviews take place.”
In addition, they have influenced, “the exposure to interest rate risk of the mortgage portfolio has been reducing in recent years, increasing the weight of fixed rate loans.”
Before the abrupt rise in interest rates, three out of four new mortgages were already granted at a fixed rate and the average residual term has dropped from eighteen years in 2017 to barely ten at the end of 2021, “with which there would be margin to solve the problems by increasing the term of the mortgages”. But, they point out, “despite that, we will have serious problems derived from these decisions to increase interest rates.”
At this point, they have indicated that the Royal Decree approved in December 2022 expands the current Code of Good Practices, so that it can cover those vulnerable debtors affected by increases in interest rates that reach excessive levels of mortgage effort, in the event of any increase in the mortgage effort.
“Theoretically, it should protect families with an income of less than 25,200 euros (three times the IPREM) who dedicate more than 50% of their monthly income to paying the mortgage and middle-class debtors who are at risk of becoming vulnerable due to the increase of mortgages with an income limit per household of up to 29,400 euros per year”. “Those for whom the mortgage burden represents 30% of their income and have had an increase of at least 20% may adhere to this plan.”
However, they have pointed out, “the plan is failing since only a few dozen operations have been signed and similarly, as it is the free decision of the banks to grant the operations, those who take advantage of the relief measures of the Royal Decree will pay much more interest at the end of the mortgage, which does not constitute any solution”.
The agreement between the Government and the banking sector includes “the possibility of extending the repayment period up to seven years, applying a grace period of one, two or five years and reducing interest during that time.” “For those with mortgages, it means substantially reducing the amount of their monthly installments, but also having to pay more interest in the long run.”
“The rise in interest rates on mortgage loans is going to cause an enormous transfer of income from families, especially the most vulnerable, to the banks,” they point out in the motion from United We Can and have added that “most of this huge figure will be transferred directly to bank profits, because the cost of money has hardly increased for the banks because the price of money has not been transferred to the liabilities of the banks since the bank has not yet increased the remuneration to its clients for their accounts and deposits.
Thus, they have insisted on “extraordinary benefits for banks, but a high cost for families, because this rise in rates triggers the monthly cost of loans, placing many of them in serious difficulty in paying their monthly installments” .
Finally, they have insisted that “we must learn from the experience of the past.” “Spain cannot consent to a new wave of evictions of families who cannot pay their mortgage,” they concluded.