The Bank of Spain has estimated how many households can benefit from the code of good practice for mortgage protection, which came into force on 1 January. According to a study by Spain’s banking watchdog, the half a million customers who can benefit from the protection scheme could be significantly exceeded, which is lower than originally envisaged by the government when these new regulations were announced.
In particular, two codes of good practice were approved. The first was a reform already in place since 2012, which improved the coverage of its events. Second, temporary use is new and more general. According to a study by the Bank of Spain, there would be about 200,000 households that would benefit from the first code, and more than 550,000 from the second code. It is not possible to add both numbers as there are users who will benefit from both.
However, the Bank of Spain recalls that the rate of applications for the total number of covered households is usually low. In particular, he believes that according to the statistics of the past years, there would be up to 193,000 households under the new code and up to 76,000 households under the reformed code.
The Bank of Spain’s estimate of the number of households with “qualified” access to these codes of good practice is significantly lower than that presented by the government when the regulatory changes were announced. Thus, it was estimated at 1 million houses. Angel Estrada, Director General of Financial Stability at the Bank of Spain, explained that this assessment was made based on a higher rate growth scenario than the one in the current report.
This home mortgage payment benefit can have an impact on consumption. According to the Bank of Spain, assuming a low financial burden, the capital can be used for household consumption. This increase will be about a tenth of the GDP.
The Bank of Spain presented a financial stability report this Wednesday, analyzing possible risks for the sector. The document came weeks after a financial earthquake hit banks in the US and Switzerland and sent prices down for all Western groups. The Spanish supervisory authority emphasizes the strength of the Spanish financial system and the difficulties of contagion with the existence of different business models and a better liquidity situation.
In particular, the Bank of Spain highlights the following differences, which guarantee that infection is highly protected. Among them, it reveals the absence of a direct impact of systemic importance on SVB and Credit Suisse, differences in the business model in relation to these entities, especially in terms of depositor diversification, the majority of the retail sector in Spain. case, and a broad coverage of the Deposit Guarantee Fund, as well as a high liquidity initial position.
Although the Bank of Spain considers that, although the difficulties of these entities are “specific”, they generate uncertainty in the financial market, which can increase the risk of increased funding costs for banks, as well as tightening liquidity.
The Bank of Spain’s concern is also focused on another area, and that is that the risks that it warned of a slowdown in economic growth or the impact of inflation will materialize. In this sense, it ensures “the generation of additional financial impact on the banking sector”, which will complicate funding costs, but also worsen credit quality. In this way, he insists on being “reasonable” with provisions to cover losses and use recent profits to increase resilience.
However, the Bank of Spain is more optimistic than in previous reports about the risks of a slowdown in the economy or the impact of inflation. However, they admit that there is a delay in lending in Spain, both for households and companies. Estrada noted that this dynamic will be present in the banking sector in the coming months.
Source: El Diario
