MADRID, 26 Jul. (EUROPA PRESS) –
The balance of total mortgage securities in circulation fell in June to 305,522 million euros, after recording a slight decrease of 0.5% in year-on-year terms, according to the statistics on mortgage securities published today by the Spanish Mortgage Association (AHE). ).
However, the association points out that this fall constitutes “one of the most moderate” in the last ten years, along with the 2019 financial year, when it fell 0.2%, and with the exception of 2020, marked by the pandemic and when a punctual net increase of over 3% was recorded.
For their part, the new issues of mortgage securities admitted to listing have risen, in the first half of 2022, to 34,522 million euros, almost 22,000 million more than that issued in the same period of 2021 and 4,500 million to reach almost 39,000 million placed throughout the previous year.
MORTGAGE CERTIFICATES
The AHE points out that this dynamism has been extended to both mortgage bonds and mortgage asset securitization bonds. The former, which represent the main source of refinancing for the mortgage portfolio, have increased their volume of issues by around 150% with respect to the amount accumulated in the first half of 2021.
Specifically, during the first six months of the year a volume of new issues not exceeded since 2012 has been registered for an amount of 21,400 million euros.
This favorable evolution shown in gross terms by mortgage covered bond issues has been positively reflected in their outstanding volume, but with a “significantly lower” rate of increase, of 4.9%, due to the actual maturity of the bonds. from the portfolio.
In absolute values, the net change in the balance was 10,275 million euros, which raised the outstanding balance to 218,611 million euros as of June 2022. This last figure represents approximately 35% of the financing granted with a mortgage guarantee, maintaining at similar levels in recent years.
SECURITISATION OF ASSETS GUARANTEED WITH MORTGAGES
For their part, mortgage-backed asset securitization bonds, which represent around 15% of the mortgage portfolio, registered an outstanding balance of 86,922 million euros in June, which represents a decrease of 11.9% with respect to the balance of the same month of the previous year.
In turn, the volume of issuance of these securitisations has risen to 13,122 million euros in the first half of the current year, more than triple what was issued in the same time frame of the previous year, which was 4,194 million euros. . The AHE points out that this “significant increase” could respond “to its use as collateral in the liquidity auctions of the European Central Bank (ECB).
ENTRY INTO FORCE OF ROYAL DECREE LAW 24/2021
In its report, the AHE points out that 2022 is developing in a macroeconomic context “charge of uncertainty and volatility” in the financial markets, which implies “an upward adjustment of returns.” The expectation of additional spikes in financing costs on the horizon could have driven the early search for liquidity as a “measure to protect” from the rises that may come later, he deepens.
Added to this scenario is the entry into force on July 8, 2022 of Royal Decree Law 24/2021, which represents a new regulatory paradigm for covered bond issuers and which comes to
strengthen the market to make it “more competitive and efficient”, not only at a national level, but also at a European level.
The association explains that this new regulatory framework establishes the obligation to reserve a liquidity cushion that covers the payment of capital and interest for at least 180 days to mitigate the risk of default; regulates the segregation of the separate equity (cover pool) –which will be made up of a defined set of eligible assets– to facilitate its liquidation in the event of bankruptcy of the issuer.
The new royal decree also establishes, among other measures, the requirement to appoint a control body (cover pool monitor), whether internal or external, as well as the appointment of an independent bankruptcy administrator, so that in the event of insolvency, this The latter protects the rights of the holders of these bonds and of the holders of the derivatives against the rest of the creditors.
The AHE points out that these new requirements should “serve” as a catalyst for this type of issue at a time when obtaining funds through the LTRO lines “will be less guaranteed”, according to the latest movements announced by the ECB within the current context of strong price increases.
ASSESSMENT OF THE RISE IN RATES
In statements to Europa Press, the AHE recalled that the announced rate hike occurs in a “complex context”, in which growth “is highly compromised”. “We believe that surely the ECB, when executing its policy, tries to find a balance between economic growth and inflation,” he says.
In this way, it calls for waiting “a few months” to see what the response of the market and the economy is to this rise. “It is not convenient to set aside economic development and prioritize only inflation,” concludes the AHE.
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