Spanish Banks Consider Extending Lifespan Of Mortgages
Spain News
Published: 20 October 2022 14:01 CET
Homeowners in Spain could have the option of extending the repayment term of their mortgages under plans being discussed by lenders.
The move could see vulnerable households who see a rise in their variable mortgage costs of more than 30% being given the option to extend the lifespan of their loan.
The muted proposals are a part of a wider set of measures aimed at helping the country’s most vulnerable citizens deal with the rising interest rates and the cost of living.
One of the sources said, "Households earning not more than 24,300 euros a year would be eligible to extend the lifespan of mortgage repayments.”
The source also confirmed that to qualify, the loan repayments would need to account for 40% or more of the family's total income.
However, there are fears that if the plans were implemented very few homeowners would qualify given that it would only apply to those earning less than 24,300 euros per year.
Patrica Suarez, head of the consumer association Asufin, told Reuters that “few people will qualify at that income threshold”.
According to the source, the initiative would also only target first-time buyers who had taken a mortgage out from 2012 onwards.
Economy Minister Nadia Calvino said on Wednesday that the government was in the process of working with lenders to provide additional support to people with “many proposals on the table”, but gave no further details.
Under the mortgage lifespan extension, the outstanding loan would continue to be repaid in new installments with interest accrued at the appropriate rate.
"As it stands with this proposal, you may even end up paying more interest in the long term", Suarez said.
If the plans are approved, then they would be added to the industry’s code of good practice and would allow for lower associated costs such as notary and registry fees as well as mortgage renewal costs.
One of the country's leading lenders CaixaBank has also suggested that they could also freeze mortgage repayment increases over the next 12 months to help customers weather the economic storm.
Source
https://www.reuters.com/markets/europe/spains-banks-seek-extending-lifespan-mortgages-vulnerable-households-2022-10-19/
https://uk.finance.yahoo.com/news/spains-banks-seek-extending-lifespan-185410818.html
