Spain’s banks seek extending lifespan of mortgages for vulnerable households – Yahoo Finance - 24line

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الأربعاء، 19 أكتوبر 2022

Spain’s banks seek extending lifespan of mortgages for vulnerable households – Yahoo Finance

By Jesús Aguado

MADRID (Reuters) – Spanish lenders are open to extending loan repayments for vulnerable households that experience a rise of at least 30% in variable mortgage costs, three sources with knowledge of the matter said on Wednesday.

The proposal is part of a wider set of measures aimed at helping exposed families cope with an increase in interest rates and rising cost of living that banks are discussing with government.

“Households earning not more than 24,300 euros a year would be eligible to extend the lifespan of mortgage repayments,” one of the sources said.

The loans qualified in the plan have to account for at least 40% of the family’s income, once taking into account the rise in interest rates, the source said.

It was not clear how many may apply for such a measures but Patricia Suarez, the head of the consumer association Asufin, told Reuters that few people will qualify at that income threshold.

The proposal put forward by banking associations to the Spanish government would be applied to variable rate mortgages signed from 2012 onwards to finance first-home purchases, the source said.

The banking association AEB and the savings banks association CECA declined to comment.

On Wednesday, Economy Minister Nadia Calvino said the government was working with lenders to provide relief measures amid rising interest rates, with “many proposals on the table” that required being analysed, but gave no further details.

Once the extension of the mortgage term to final maturity has been agreed, the outstanding loan would continue to be repaid in new instalments, according to the proposal, one of the sources said, confirming a report from news agency EFE.

The loan would also continue to accrue interest at the appropriate rate.

“As it stands with this proposal, you may even end up paying more interest in the long term”, Suarez said.

The measures, which would be introduced in an amended industry-wide code of good practice, would also allow for lower costs arising from notary and registry fees and mortgage renewals.

(Reporting by Jesús Aguado; Editing by Belen Carreno and Sandra Maler)

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