Spanish lenders have been accepting mortgage repayment holidays if requested by borrowers, and almost 900,000 have done so since the coronavirus crisis started.
By the end of August 893,343 mortgage repayment holidays were in place, out of more than one million requested, most of them voluntary agreements between borrower and lender, rather than the stricter mandatory moratoriums introduced by the Government, according to figures recently released by the Bank of Spain.
Voluntary agreements are for most borrowers who need some breathing room on their payments due to financial difficulties brought on by the Covid-19 crisis, whilst mandatory moratoriums are for ‘vulnerable groups’, and are harder to qualify for.
666,700 voluntary agreements have been made out of a total of 731,600 requests (91% approval rate), whilst 226,644 mandatory agreements have been reached out of 269,000 requests (84% approval rate).
Second-home owners and expats will not qualify for mandatory moratoriums, but some have reached voluntary agreements with their lenders. I have heard borrowers complain of language difficulties trying to negotiate with uncooperative lenders, whilst others say it was easy. Voluntary agreements are negotiated at the branch level.
In total, more than 45 billion Euros in Spanish mortgage loans are now on repayment holidays, which in normal times would be called default. That means less income for banks, and higher fees to come for services, it’s not hard to imagine.
The C19 economic crisis will obviously put banks under pressure. Consolidation in the sector is one way to reduce the risks of the health crisis turning into an economic crisis, turning into a banking crisis. That helps explain the likely fusion of CaixBank and Bankia into one of Spain’s banking groups, pending bigger deals at the European level. Expect to hear much more about Spanish and European banking sector consolidation in the months to come. Boring but important.
If you are struggling to meet your mortgage repayments, and need a mortgage repayment holiday, then the best thing to do is contact your branch to discuss the possibility. But if you need or want to dispose of both your property and mortgage, then contact EU Property solutions, who specialise in helping their clients negotiate a settlement with lenders.