Finally, after the usual tug of war of regulations of this type, an agreement was signed between the Ministry of the Economy and the banking sector to lighten the mortgage burden of over one million vulnerable families or at risk of vulnerability due to the increase in the Euribor, a third of households that have variable rate mortgages, at least a priori. We will eventually see how many people will be able to take advantage of the measures, which will be far fewer than those who need them.
We welcome the agreements to mitigate the effects of the rise in interest rates on the mortgages of vulnerable and potentially vulnerable families; Anything that involves greater flexibility of the financial effort will facilitate the transition in a situation of economic uncertainty. But maybe we become obsessed with the mortgage payment when in many cases it is not the main problem when it comes to tackling monthly financial expenses.
The mortgage is not a problem to be solved, it is the basis for creating permanent financial solutions. For this reason we believe that the initiative is incomplete, as it only deals with a part (the mortgage) of what is intended for financial payments. The financial equilibrium of a family lies in the relationship between its income and its monthly financial expenses, and the mortgage is not only not the only one, but it is not even usually the most onerous month by month.
And even more, if we take into account that the general effect of inflation on current expenses must be added to the increase in the mortgage payment, which has meant that thousands of families have had to go into debt to finance the shopping basket or the ‘power. To which is added the letter of the car or the deferred credit cards. According to me, It doesn’t matter so much what percentage of your income goes to pay off the mortgage, but how much money is left over each month to pay the installment; especially when the income as a whole is not sufficient to punctually meet all financial, mortgage and non-mortgage commitments.
Here is an opportunity to have created an initiative of great social significance, at least informative, of support for the financial order of families (including the mortgage), because that’s where thousands of families are finding a solution when the problem is that the long term comes every month. Only an operation encompassing all financial payments can solve present problems and eliminate future uncertainties, so that a crisis can be dealt with clearly and with maximum financial stability: which is what you get when the sum of monthly payments to lenders is reduced by up to 80%.
The grouping of credits is a financial option which consists in grouping all the debts contracted (credits, cards, fast credit, financial, etc.) in a single mortgage loan. In this way, the payment of a single monthly installment is faced, the amount of which will be lower than the sum of the various installments separately. Credit grouping requests have already been growing since the end of 2019 due to the increase in consumer credit, but now, with the uncertainty generated by the economic situation, and after the pandemic, many have opted for this path. These operations group all types of credit, although it is very common to apply to customers indebted by one or more cards swivel.
A transaction that includes all financial payments solves present problems and eliminates uncertainties in the future
In general it applies to consumer credit and, within this, above all to deferred credit cards with high interest rates. It is also recurrent in those credit commitments whose cost is so high that when it is transferred to the mortgage rate, the monthly financial burden decreases very drastically.
It is a financial mechanism that provides a comprehensive response to these situations which do not involve the consumption of public money and which are a real solution for households and at the same time mean that banks expand their type of business with a very positive social impact. Entities are clear.
It is therefore not surprising that the transaction conversion ratio, i.e. the ratio of transactions presented to debt consolidation operations approved by financial institutions have grown by 30% in the last six months, according to our data. This clearly reflects banks’ growing interest in this solution in the face of uncertainty, in a context of high inflation and declining growth forecasts for the economy.
The ECB, quite logically, has expressed concern that mortgages that make use of the provisions of the new Code of Good Conduct are hiding a recovery in non-performing loans. This would not happen with a global debt consolidation operation, since this method helps to contain the insolvency rate of the system (the customer pays more easily) by improving its profitability (the operation guarantees the institution significant returns).
Also, allows entities to gain market share at the expense of competitors and attract reliable customers at a time of uncertainty and rising interest rates. And just when half of the new mortgage business derives from the theft of transactions between entities, in the process of improving the rate or general conditions, but also by taking out mortgages for purposes other than the purchase of a house, such as credit pooling transactions.
