October 21, 2020

The Government is looking for alternatives to aid for mortgages and tenants that expire next week


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A large part of the social measures approved by the Government to mitigate the effects of the pandemic currently have an expiration date. Next week will expire, among other measures, the deadline to request loans endorsed by the ICO to pay the rent and access to the mortgage moratorium set by the Executive. All this while the second wave of the pandemic forces to carry out the first confinements.

That is why, as this newspaper has learned, the Government is studying alternatives to maintain the aid beyond September. In the mortgage market, the possibility of extending legal moratoriums is gaining ground, an option that has the approval of the entities banks of the country. Even so, if the Executive decided to turn its back on that measure, the suspension of the payment of the loans that the banks voluntarily assumed months ago in a sectorial manner would remain in force, although only for those who have requested it.

New measures are also being studied to help the most disadvantaged tenants to afford the rent. The star initiative of Executive In this area, it was to make available to certain rented credits with the guarantee of the State to pay the monthly rent. An initiative that, however, has not had the desired effect.

Although no official figures have been provided, the Asval homeowners association estimates that only 1.3% of tenants have applied for these loans. The reason? Citizens have preferred to reach agreements with their landlords rather than go into debt. Sources in the financial sector also admit that there has been “little interest” in these credits, and highlight the delay they have accumulated since they were announced. until they were finally put into operation.

Alternatively, Asval has proposed the creation of a direct aid package of more than 700 million euros, which according to its calculations would facilitate the payment of rent to 350,000 vulnerable families who have to allocate more than 30% of their income to pay rent. According to the association, non-payments for rent have tripled in recent months.

The Government, however, is in favor of other formulas. One of them is to legally reinforce the so-called “Rebus sic stantibus” (Things being like this) or the “covid clause”, which allows lower incomes or even suspend the contract without penalty if the pandemic continues to advance. At the end of August, the Executive made a commitment in the Senate to carry out a study on the option of including this clause in the legal regime of obligations and contracts.

Regarding evictions, their prohibition is stipulated until next October 1. And United We Can is pressuring the Government to expand it, not only until the end of the year, but until the Covid crisis continues. A possibility that has triggered the alarms of certain associations in the real estate sector.

“The prohibition of evict It has been in force for several months now and is making a dent in the owners, both individuals and companies. In addition, many tenants are failing to pay rents, aware that they are not going to face a launch, “industry sources explain to this newspaper, who claim that the solution to this conflict” is not burdened on the backs of the private sector ». The Platform for People Affected by the Mortgage (PAH), on the other hand, has claimed the Government to approve a moratorium on evictions that includes all types of vulnerable families, including those who are squatting.

Bank of Spain alert

Just yesterday, in an analytical article, the Bank of Spain sounded the alarm about the increase in credit defaults. In the banking sector, no one doubts that defaults on, for example, consumer loans and mortgages will eventually skyrocket in the short-medium term. We are still at a too early stage to appreciate this effect in the statistics since the economy “is anesthetized,” say financial sources. The measures implemented by the Executive, such as the mortgage moratorium, have avoided in the short term a barrage of defaults, although these are yet to come.

Next week the government’s measure on home equity loans -although the voluntary moratorium of the financial sector is still in force- it will expire, if it is not renewed. In this sense, the Bank of Spain warned yesterday that ending it threatens to trigger default. The European Banking Authority (EBA) pointed out three months ago that the default rate could escalate to figures from the previous debt crisis, around 12-13%.

October, if everything continues like this, would be the starting point to begin to see the increase in arrears. However, worrisome figures are not expected until spring 2021, when those bad loans will already be counted as bad, requiring a 90-day lapse.

To date, according to figures from Bank of Spain, 226,644 mortgage moratoriums have been granted under the state measure, and another 391,904 non-mortgage loan operations. In the case of the voluntary measure implemented by financial entities, those approved in total loans amount to 666,669 loans.

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