Spanish families have made their own belt tightening once the first state of alarm and corresponding strict confinement were overcome that kept the entire society secluded to prevent the spread of the coronavirus. Aware of the situation that could be coming in labor and economic terms, the amount of your savings increased in the third quarter of 2020 just as it had been doing in previous quarters. AND they paralyzed the signing of loans to finance their purchases by decreasing the value of their loans, especially consumer loans.
This is revealed by the statistics published by the Bank of Spain on the financial wealth of households and companies referring to the period from July to September last year. The loans in force in the summer had a value of 701,228 million euros, which is 1.5% less than in the second trimester, that of confinement. Between April and June, many families had resorted to financing to meet their expenses, which caused an upturn in loans to over 708,000 million euros. While mortgage debt continues to decline month after month, mortgage debt consumer credit has also been reduced in the third quarter after a second quarter in which it increased to 38,000 million euros. In summer, that figure was already reduced by 8,000 million.
A contrary path runs through the money of citizens who continue to save through Bank deposits. Before the coronavirus crisis, Spaniards had already been saving in deposits as the only alternative to face the future before the volatility of the Stock Exchanges. With the covid-19, this situation has been increasing due to fear to face the future problems of many citizens. In fact, the money of families in deposits stood at 775,231 million euros in the third quarter of last year, which is an increase of 13% with respect to the same period of the previous year; and an increase of 1.1% compared to the second quarter.
With these data, the net wealth of Spanish households and non-profit institutions serving households stood in the third quarter of the year at 1.55 billion euros, which represents a 2% drop compared to the same period of the previous year.
In relation to GDP, the net financial assets of Spanish families represented 135.9%, a ratio that, in this case, is 7.1 percentage points higher than that of a year earlier, mainly due to the fact that GDP fell with more intensity than the value of these assets.
While household debt continues to decline, this is not the case with corporate debt. The increase in total debt is the result of a different behavior of these two sectors, since the financial commitments of companies with entities has gone from 913,000 million in the third quarter of 2019 to 941,000 million euros in the same period of 2020, reaching 82.1% of GDP. Meanwhile, the indebtedness of families is at 61% of GDP. The increase in the case of businesses is basically explained by the credits guaranteed by the ICO that the entities granted in the second quarter of last year to alleviate the effects of the pandemic.
For its part, the total wealth of households, before discounting their debt, reached 2.31 trillion euros between July and September last year, 1.8% lower than a year earlier.
The Bank of Spain explains that this decrease is due to negative net revaluations of 118,400 million euros, which were mainly concentrated in the first quarter of 2020 due to the fall in the price of assets in financial markets, while transactions were positive, with a net acquisition of financial assets of 75.9 billion euros in the last year.
In relation to GDP, the total financial assets of households and NPISHs represented 201.7% at the end of the third quarter of 2020, 11 percentage points more than a year earlier, due to the sharp decline experienced by GDP.
By component, the bulk of household financial assets was in cash and deposits (42% of the total), followed by equity stakes (24%), insurance and pension funds (17%) and stakes in investment funds (14%).
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