The pandemic reactivates mortgage credit

“During the past financial year, the outstanding exposures of the loan portfolio, which encompasses both households and non-financial corporations, experienced significant growth, exceeding 30,000 million euros net, mainly thanks to the approval of the ICO credit lines aimed at the productive sector ”. The association describes the rise as notable, which amounts to 2.6% in relative terms.

This market advance represents a radical change of direction in this type of financing. Since the bursting of the housing bubble and the global crisis triggered by the failure of the investment bank Lehman Brothers, families and companies have entered a debt reduction process that has lasted for more than a decade.

In the last twelve years, the mortgage debt of families has been reduced by 600,000 million euros, according to the Spanish Mortgage Association in its latest report on the credit market. “Since approximately 2009, the private sector has been witnessing a debt reduction that moderated its intensity in the most recent stage, in which around 600,000 million euros have been written off, focusing its efforts on the liquidation of assets and restructuring of debt in the business segment and especially in those sectors linked to the real estate market ”.

It should be remembered that the real estate crisis of 2008 was caused by an excess of indebtedness by companies and families, after more than ten years of economic growth in the heat of the real estate bubble. In the home purchase market, loans were offered for 100% of the appraised value of the property and admitting a capacity for effort on the part of households equivalent to the disposable income of families.

It must be remembered that until then, in this market the 35% threshold had never been exceeded in the effort of the borrowers, nor the 80% of the appraised value of the home. To this should be added inflated mortgage appraisals. The soaring revaluation of the flats allowed this dynamic, since within a few months, the “investment” became profitable. A situation similar to that of mortgage financing for companies. Until the collapse occurred.

Cycle change in pandemic

“At the beginning of 2020, coinciding with the declaration of the state of alarm, there was a turning point in the evolution of credit exposures motivated by the deployment of public financial stimuli that sought to reduce the economic impact of the pandemic,” he says. the Spanish Mortgage Association.

“These support included several lines of liquidity and investment with a largely state guarantee, through which more than 1 million operations have been granted mainly to support SMEs and the self-employed. These lines have made it possible to mobilize more than 127,000 million euros until May 2021. However, this activity was especially concentrated during the second quarter of 2020, because if the data of the portfolio referring to the first quarter of 2021 are observed, the outstanding balance -which amounts to 1,218,084 million euros -appears to face a path with more moderate growth than the previous year ”, highlights the AHE.

In absolute terms, the mortgage loan portfolio registered an annual increase of more than 22,500 million euros last year, representing an advance of 1.9%. However, the AHE points out that in quarterly terms, the debt balance has recorded a decrease of 6,000 million euros in the first quarter of the year, equivalent to 0.5%. Companies led this debt reduction, with 5,000 million.


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