Spanish Banks Consider One-Year Mortgage Repayment Freeze

Spain’s banks could freeze mortgage repayment increases over the next 12 months, it has emerged.

The proposal is believed to have come from CaixaBank, which is one of Spain’s biggest mortgage lenders with more than 25% share of the market.

The move would mean the freezing of any interest rates on variable-rate mortgage contracts.

With household budgets under increasing pressure from soaring inflation, the move would help cushion the blow for Spanish homeowners with around 75% of all mortgages thought to be variable rates.

Over the past year, the Euribor rate, which banks in Spain use as their reference point, has risen from -0.5 to 2.6% placing a huge strain on mortgage holders with many struggling to keep up their repayments as a result.

"The proposal foresees freezing the increase in payments on variable mortgages for twelve months," a source said on condition of anonymity, confirming a report in the Spanish newspaper El Periodico de Catalunya.

The source said that although the proposals were being discussed among the country’s different lenders, things could still change.

The Spanish banking association (AEB), Caixabank and the government’s economy ministry, declined to comment on the rumours.

If the move is approved by the government, those with mortgages with Santander, BBVA and Sabadell could see their mortgage repayments frozen for the next 12 months.

CEO of CaixaBank Gonzalo Gortazar confirmed that the majority of their own mortgage customers who took out a mortgage in the past six years would not see an increase in their repayments anyway as they were currently on fixed-rate mortgage contracts.

It follows a statement last week from the Minister of Economy, Nadia Calvino who confirmed that the government would continue to work with lenders over the coming weeks to help homeowners.

A government source is also thought to have said that there were a number of proposals on the table including the possibility of allowing families to switch to a fixed-rate mortgage at no extra cost.

Source

https://spanishnewstoday.com/spanish-banks-consider-freezing-mortgage-repayments-for-1-year-to-cushion-cost_of_living-crisis_1857467-a.html
https://www.reuters.com/business/finance/caixabank-proposes-sector-wide-freeze-variable-mortgage-costs-source-says-2022-10-11/

Image Credit: CaixaBank