Governor of the Bank of Spain says that it is not necessary to extend the mortgage relief measures

MADRID, Nov 20 (Reuters) -Bank of Spain Governor Pablo Hernández de Cos said on Monday he did not see the need at the moment for banks to potentially extend mortgage relief measures for vulnerable households, given the lack of use by citizens until now.

Last week, the Prime Minister of Spain, Pedro Sánchez, said that the new coalition government planned to expand the annual income threshold to qualify for mortgage aid up to 38,000 euros ($41,283), as part of a set of measures to help families cope with the increase in the cost of loans.

“In this central scenario in which the economy continues to slow down, but could recover again in 2024, we do not see the need to make a modification to the code of good practices,” said De Cos at a financial event held in Madrid.

Under a modified code of good practice for the entire sector, Spanish banks must offer mortgage assistance to vulnerable families with incomes of less than 25,200 euros per year.

In addition, middle class families with incomes of less than 29,400 euros and who were at risk of non-payment would also receive additional protection.

Around three quarters of the Spanish population own a home. They are among the most exposed to a rise in interest rates, with around 70% of their more than 4 million outstanding mortgage loans being at the mercy of variable rates.

The average cost of a mortgage in Spain has risen to 3.84% in August, compared to 2.03% in the same month of 2022.

In November 2022, the Spanish Government approved mortgage relief aid for more than one million vulnerable households, but so far only 42,000 applications have been submitted in the first seven months of 2023, according to data from the Bank of Spain.

“We have observed that the use is still limited, our assessment of this fact is that the economy has done reasonably well; we have all been surprised by the resilience of the labor market,” said De Cos.

(Reporting by Jesús Aguado; edited by Inti Landauro; edited in Spanish by Javi West Larrañaga)