One in three households will be able to reduce their mortgage payments

More than a million families will be able to access the mortgage relief measures approved this Tuesday by the Government, which means that one in three households with mortgages at a variable rate and therefore affected by the rise in the euribor may see their financial burden reduced.

In the press conference after the Council of Ministers, the Vice President for Economic Affairs, Nadia Calvino He explained that the Euribor, the indicator that serves as a reference for most variable mortgages in Spain, continues to be below historical levels but is already producing a very rapid rise in installments.

This reality affects 3.7 million households with variable-rate mortgages, and the Government wants that with the battery of measures approved this Tuesday, more than a million of them may have options to reduce their share mortgage “choosing the measure that best suits your needs and financial situation”.

On the one hand, the treatment of families is improved vulnerablesome 350,000, but a new temporary framework of action is opened for more than 750,000 families of middle class “at risk of vulnerability”. In addition, improvements are adopted to facilitate the early amortization of credits and the conversion of mortgages to a fixed rate.

vulnerable families

The current Code of Good Practices for vulnerable mortgagees, approved in 2012, is updated to give the option to restructure a loan with a lower interest rate during the 5-year principal grace period (Euribor minus 0.1% compared to the current Euribor plus 0.25%).

Likewise, the term to request the dation in payment of the house is extended to 2 years and the possibility of a second one is contemplated. restructuringin necessary case.

Households with incomes of less than 25,200 euros a year that dedicate more than 50% of their monthly income to payment of the mortgage, even if the mortgage effort is not increased by 50%, they will be able to benefit from the Code with a grace period of 2 years, a lower interest rate during that time and an extension of the term of up to 7 years.

As an example, Calviño has said that a family with a mortgage of 120,000 euros and a monthly payment of 524 euros after the interest rate review, will see their payment reduced by more than 50% during the five-year grace period. , up to 246 euros.

Middle-class families at risk

A new Code is also proposed to relieve families of middle classwith income of 29,400 euros per year, which are considered in risk of vulnerability due to the increase in the mortgage payment, which consumes more than 30% of their income after a rise of at least 20%.

For all these cases, which would add up to more than 750,000, financial institutions must offer the possibility of freezing for 12 months of the installment, a lower interest rate on the deferred principal and an extension of the loan term of up to 7 years.

additional measures

Finally, further reduce the bills y commissions to facilitate the change from variable rate to fixed rate and the commissions for early repayment and change of mortgage from variable to fixed rate are eliminated throughout 2023.

The two Codes of Good Practices will be voluntarily adhered to by the financial sector, but Calviño is confident that all entities will sign up to it within a month, with the aim that they will be in force on January 1, 2023.

The economic vice-president insists that “it is time to pitch in” and gives CaixaBank, in which the State itself participates, as an example, which has already said that it will accept these measures, which are mandatory once the banks subscribe to them. .

One month to inform customers

The government wants the banks Disseminate the new relief measures for those with mortgages as widely as possible and inform customers who can benefit from the Code of Good Practices “individually” within a month.

In the royal decree-law consulted by EFE, the Executive demands that entities provide a telephone number and an email address where they can answer questions and receive customer requests.

In addition, the text establishes that information will be provided on security measures mortgage relief “in a prominent place” on the websites of the entities and through their commercial network of offices.

Bank of Spain Guide

On the other hand, the Bank of Spain will prepare a guide of tools with the relief measures for mortgagees “in adapted and understandable terms” that will be posted on its own website and that will also be available on the Ministry of Economic Affairs and banks.

In addition to preparing the guide -an initiative for the promotion of financial education-, the Bank of Spain will be in charge of keeping it updated and it will include not only the content related to the measures of the Codes of Good Practices aimed at mortgagees but also exemption mechanisms debt provided for individuals in bankruptcy legislation.

To make all this information more understandable, the agency will provide specific examples of debtor assumptions in different situations and the alternatives to consider.

The Bank of Spain will also develop and make available to the public on its website for information for banking customers two simulators to inform citizens about the possibilities of being “eligible” to access the measures of the Codes of Good Practices, as well as the impact of the proposed measures on the conditions of your mortgage loan.