He says in his resume and on his Twitter account that he has a degree in Law, spokesperson for Podemos and general coordinator of the party in Castilla y León. This is Pablo Fernández, the spokesperson for the party they founded Monedero and Pablo Iglesiasand which now works reluctantly under the orders of the Sumar de Yolanda Diaz.
Well, Fernández, in a recent intervention, harshly criticized the ECB’s decision to raise interest rates by a quarter of a point to 4.5%. A decision in line with the step marked by the North American Federal Reserve and that seeks to stop the inflation that irremediably impoverishes European citizens and, within them, especially the Spanish, where the loss of purchasing power of the average citizen is more pronounced.
Fernández was talking about the “regrettable decision of the ECB to raise interest rates.” He said that “it does not solve the causes of inflation and the only thing it will do is impoverish thousands of Spanish families at the expense of continuing to enrich the banks.” And that was when he insisted on the great proposal that they have found in his party: “We must remember that at Podemos we have been insisting for many months on the urgent need to put a cap on variable rate mortgages, and we maintain this proposal and we believe that it is unavoidable and urgent because thousands of families are going to be affected by this ECB measure, and they are going to be suffocated and that is why we believe it is urgent that this limit be put in place.”
But this proposal only demonstrates the profound ignorance about the functioning of the market economy shown by the Mr. Fernandez and, by extension, his political group. The classic error that has to do with understanding the phenomenon of inflation.
As we have already explained in other lessons, inflation is a monetary phenomenon, which occurs automatically with the extension of the monetary mass by central banks. Thus, it is not due to the cruel greed of the businessmen who irremediably raise the prices of their products to crush the proletarians, how they think about Podemos.
Furthermore, the only way to stop inflation is by reducing the monetary mass and this is achieved by giving value to money, ergo, by raising interest rates. And here comes the other big misconception. If inflation is not controlled by establishing limits on the price of goods and services, it will not be possible to stop the price of mortgages by establishing maximum limits on LSA interest rates. variable rate mortgages. And Podemos seems to be unaware that, on the one hand, the limits on the prices of things only generate shortages and dizzying increases in those prices, as is happening in the intervened rental market in Spain.
On the other hand, banks do not raise mortgages to enrich themselves at the expense of the mortgaged poor, but rather the rise in rates also makes the money that the entity itself raises more expensive and which needs to raise rates, among other things, to be able to continue making profits. those products and not sell them at a loss.
Top the tech clause?
It is also especially striking that Podemos talks about “establish a limit” to the interest rates on variable rate mortgages. We do not know if he meant “ceiling” or for banks to establish a “ceiling clause”, like those in the market when judicial populism caused floor clauses to be withdrawn in the mid-2000s because they were considered abusive.
Then, and coming from times in which interest rates were close to 20%, financial institutions, since the end of the 90s and during the first decade and second of the 2000s, granted mortgage loans at variable interest rates that oscillated between range between a maximum and a minimum rate limit. The minimum used to be a little lower than the reference interest rate at which the credit was contracted at the time of signing, and the maximum was around 10%. That is, at a time when the The client’s recourse was for mortgages close to 20%, the bank offered you the possibility of contracting a product with a minimum and a maximum that would allow the client to assess the level of risk on the payment they were suffering.
We already know the story: interest rates plummeted and have remained around 0% or negative for years, which caused many clients to continue paying their mortgages at the lower limits of their mortgages, seeing how the Euribor was at 0 and your mortgage at 4% or 3%.
The current context is different, it is not one of lowering rates, but rather increases. How high are they going to go? I don’t know if there are many people who dare to predict it, but history is there to look at and 30 years ago interest rates above 15% were paid on the purchase of mortgages. Will the same thing happen? Who can say? The only thing certain is that, when those mortgages with ceiling and floor clauses were signed, they made sense, but when the client had to comply with what was signed, he did not want to. Now we suffer the consequences: rates rise without upper limits because they fall without lower limits.
2023-09-23 05:12:15
#Podemoss #proposal #limit #mortgages #insulting
