The economic slowdown of the last part of the year is beginning to be reflected in the new credit generation. From the data relating to the month of October it can be deduced that a slowdown in the granting of new loans both for the purchase of homes and for consumption and companies.
More specifically, in October, at which the latest data for the Bank of Spain, production of new mortgages grew by 12.4%according to analysts of Swiss credit in a recent report.
This breakthrough is the smallest on record. for new mortgages since January of last yearwhen the granting of credit was still affected by the stop of the pandemic.
[El BdE no descarta la recesión pero ve un dinam ismo mayor de lo esperado en el cuarto trimestre del año]
As economic activity picked up again, mortgage lending also grew by 60.1% in May. In October, however, this progress slightly exceeded 12%, below the records of the immediately preceding months, in which a slowdown was already visible.
And we must bear in mind that these are data for October and that mortgage operations take a few weeks to close, therefore a slowdown greater than that reflected in the data may already be underway.
For this reason, improvements in the bank’s interest margin are expected in the coming months. “Since the gradual repricing of loans in Spain involves a delay in the expected benefit from banks’ net interest income, we believe the fourth quarter is likely to be the first of more pronounced increases,” said Credit Suisse experts.
As for the consumer loans, new production shows an increase of 3.9%. It’s not the lowest growth in months, but it’s at its lowest level after advancing more than 16% in January and February and 9% in March. Then came steep declines throughout 2021 due to the effect of the pandemic on the economy.
Two months of slowdown for companies
For its part, the new production of business loans reduced its growth in the months of September and October, settling at 25.7%. All after marking negative values in the year 2021when the granting of credit to businesses has sharply decreased.
He did so after a 2020 in which companies were flooded with funding due to the strong need for liquidity generated by the stop in activity and the arrival of ICO credits.
volumes drop
Taking the total credit balance as a reference, is slowing down for the third straight month. In general, the volume of credit grew by just 1.2% in October (from 1.4% in September), while the specific mortgage did so by 0.8% (compared to the previous 1.2%) , consumption fell by 0.6% and business slowed to 18.3% (compared to 23.7% in September).
This may be due to the fact that, as verified by the Swiss house, in a context in which loans are becoming increasingly onerous, especially those linked to indices such as the Euribor, as happens with variable mortgages, the demand for loans is showing signs of weakening.
[La banca endurece el acceso a las hipotecas al mayor ritmo desde 2008, según el BdE]
“We highlighted a rather weak credit demand which drives the slowdown in the evolution of volumes in October”, underline the analysts of the Swiss company in their report.
The Bank of Spain itself has already confirmed in its latest bank lending survey that, while credit conditions were tightening, demand was already declining. Something to which he attributed higher financing costs and, in the case of families, al less confidence in consumption due to the increased uncertainty.
And it is that, as can be seen from the currently available data, a slowdown in consumption despite the fact that the Spanish economy is more dynamic than expected. As reported by this newspaper, this slowdown had already been observed in the third quarter of the year through the information provided by spending with cards.
