The Ratio of Doubtful Loans for Housing Credit Shows Slight Deterioration in Q2, According to Spanish Mortgage Association

The ratio of doubtful loans for credit for the purchase of housing experienced a “slight deterioration” in the second quarter, standing at 2.4% compared to 2.3% in the first quarter, according to data collected in the quarterly bulletin of the Spanish Mortgage Association (AHE). However, In year-on-year terms, it improved 0.3 percentage points, reducing from 2.6%.

The association points out that, although Entities are being favored by the rise in interest rates by obtaining more income, The “less friendly” side of the tightening of monetary policy is the deterioration of the credit quality of portfolios.

It indicates that, for the moment, The loans have maintained a “reasonably solid” position in terms of solvency, a consequence, in part, of the fact that in recent years a good part of the market has opted for fixed-rate mortgages, “which places households in a less vulnerable position.”

However, he points out that in the second quarter the dynamics were “slightly altered”, since the doubtful exposures of the credit granted for housing acquisition experienced a
4% rebound compared to the previous quarter, although they improved by 10% compared to the previous year.

At the same time, the outstanding balance of this portfolio contributed negatively to the doubtful ratio, with drops both quarterly, of 0.7%, and year-on-year, of 2.7%.

Credits to real estate activities

Likewise, the overall credit to real estate activities and the construction sector remained practically unchanged in the quarterly rate, with a deterioration of just five hundredths, while it showed a favorable evolution in interannual terms, from 5.2% recorded in the second quarter of 2022 to 4.6% in the second quarter of this year.

In this sense, the AHE points out that the situation is caused by a “more pronounced” fall in the outstanding portfolio than in doubtful balances, which, although they slowed down the pace of consolidation, overall continued to present a favorable evolution.