Although the financing conditions are and will continue to be "very comfortable", the supervisor begins to "perceive certain signs of exhaustion of this trend", as indicated by the Bank of Spain with data from the Survey on Bank Loans collected in your quarterly newsletter. It is not a radical turn. But it is a slight change of trend amid a context of greater uncertainty about the economy.
In the previous December bulletin, the supervisor observed that the entities had once again relaxed the conditions to access consumer credit. However, in the bulletin published last Wednesday says just the opposite: sees a "slight hardening in the last quarter of 2018 in the consumer segment and other purposes, which had not happened since the beginning of 2013".
And as for the first quarter of 2019, "the entities anticipate, for the first time since 2012, a tightening of the approval criteria in all credit segments," he says.
APPROVAL CRITERIA AND NEW CREDITS
In addition, although the average interest rates applied to the new loans have remained at low levels, "there have been slight increases in the final part of 2018," he says.
During the crisis, the conditions for accessing a loan hardened a lot, to then go slowly relaxing to normal levels as the economy improved. In recent times, according to sources in the financial sector, these criteria have begun to soften, perhaps more than the bill. Especially in consumer credit, where there is greater profitability and entities have tried to compensate for the lack of margins of other segments. However, now, in an environment of doubts about the future of the economy, the logical thing is that they restrict access a bit.
The Bank of Spain has been emphatic about the strong growth of consumer credit, which has skyrocketed more than 40% in just three years. In its report on financial stability, the agency directed by Hernández de Cos He asked the entities that restrained him to the increase in their delinquency: "There have been high growth in consumer credit for the acquisition of durable goods. The very rapid growth of credit usually carries with it a greater risk, although this afternoon in manifestation. In fact, delinquency levels have increased recently, which will require entities to additionally provide for the increase in delinquency and review the sustainability of their rate of expansion in this business segment and if the criteria for granting new operations are They adjust to the medium-term risk profile they want for their loan portfolio. "
COST OF FINANCING
Average interest rate on new operations
"Although it is a small portfolio compared to mortgages, there has been a war for commercial credit between entities and possibly they have gone a little the delinquency of consumer credit. If banks also foresee a slowdown in the economy that can increase delinquency, the strategy should be to anticipate and prevent ", explains Rubén Manso, inspector on leave of the Bank of Spain and partner of Mansolivar.
On the other hand, the Bank of Spain itself indicates that in recent months there has been a slowdown in the demand for durable goods, precisely those that are financed with consumer credit such as household appliances or automobiles, the latter affected by regulatory doubts . In fact, the management of financial institutions Asnef recognizes that financing for the purchase of vehicles has suffered a slowdown in the first two months of the year.
In the midst of the Great Recession, many citizens decided to postpone these purchases while uncertainty persisted about their job. But as soon as doubts dissipated, that dammed demand tugged strongly on consumption and, consequently, on credit. Only now this demand has been sent and credit could also fall.
However, when dealing with surveys, the entities could communicate to the supervisor what they want to hear, admits a sector source that downplays these figures and does not see such substantial changes in the credit market.
The low types
In general, the uncertainty about the economic outlook has resulted in greater volatility in the markets and, therefore, in a rebound in financing costs for banks across Europe. At the same time, the announcement by the ECB of delaying the rate hike It is very damaging to the entities, which see their margins remain very narrow for a longer time. To the extent that the rates remain so low, banks face serious difficulties to be profitable. Hence, in principle they have to increase the credit. Either raising the rates somewhat or restricting the concession.
Finally, the Bank of Spain believes that the new mortgage law will make the loans more expensive. For up to three reasons: it will endorse higher constitution expenses to the banks; it will delay the terms to be able to seize and will reduce the commissions to amortize before. Yesterday, the subgovernor Margarita Delgado declared that there will be "an inevitable increase in the costs of the new loans, which entities should incorporate into their pricing policies in order to be viable and adequately repay their capital."
However, banking sources point out that the competition is brutal. Even in these conditions, they can not afford to give up good customers in particular. Otherwise they would stay out of the market, they say.
In its quarterly report, the Bank of Spain perceives that "household consumption is sustained to a greater extent by consumption in non-durable and semi-durable goods, while durable goods may be decelerating." That is, the dammed demand that occurred with the recovery is exhausted. And this would stop consumer credit. Moreover, the supervisor considers that "the reduced savings rate and the credit slowdown pose risks for the prolongation in the medium term of the vigor observed in private consumption".
"It seems that the families have taken their foot too far into the accelerator," Oscar Arce, the bank's director of studies, said on Wednesday. In this line, according to the loan survey, despite the continued increase in consumer credit, "the requests were halted and the criteria were slightly hardened". There is also a slowdown in mortgage loans due to a lower demand dynamism.