Crucial change in view for thousands of Catalans who own their house

Millions of Catalans, who own a home, have been enduring heavy uncertainty for days. Rising interest rates will cause your mortgages to skyrocket. Given the situation that can be created, both the Government and the bank have decided to move.

The Government has on the table the proposal of its partners to 'cap' the price of mortgages. For their part, the banks are betting on the freezing of quotas for a year. The measure they will have to carry out would affect around 70% of the population, who have a variable interest mortgage.

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Until recently they enjoyed very low interest rates. However, the situation has taken a radical turn a few weeks ago and it is expected that the evolution will not be exactly optimistic.

  1. Possible drastic decision that the Government could take with mortgages
  2. The banks propose to freeze the quotas
  3. What would happen if the Government's measure goes ahead?

Possible drastic decision that the Government could take with mortgages

The banking sector is not going through its best time in terms of reputation. They warn that decisions must be taken calmly and being aware that the Government is "going to despair", he says The information. They understand that in this situation it is up to them to "take control of the negotiation".

They believe that there is "margin of business in commissions, so that the increase in quotas can be contained". They indicate that the worst that can happen to them is that the Executive will mark their path, which they try to avoid by all means.

Facade of a residential building

| iStockPhoto (Greater Warsaw)

The banks propose to freeze the quotas

The offer that the bank put on the table consisted of a freeze on quotas. It would only be downgraded to some specific ones, and not all debtors would be taken into account. The option requested by the Government partners would leave the sector in a somewhat compromised situation, and it is that they would have to face three hard setbacks.

First, this proposed limit would greatly limit their income, and they would have to provision those credits that fall. Eventually, they would endure a reputational crisis should evictions occur, but the bad news wouldn't stop there.

Congress is studying a future tax against banking entities. If it works out, the intention is to bring in 1.5 billion euros over the next two years. The idea that comes up from the sector is to develop a plan that is very similar to the one that was executed during the pandemic. At that time, the different actors gave the go-ahead to a model where the payment of capital and interest to vulnerable groups was deferred.

In that period, the bank also proposed that the most helpless pay only interest for a limited time. This is another solution that could be handled currently. It is worth saying that this moratorium would involve modifying the term of the loan, mainly because there are a number of installments that would remain unpaid.

What would happen if the Government's measure goes ahead?

If the limit claimed by the Government partners were carried out, the bank warns that there would be two scenarios. First, that a maximum interest of 1.5% be applied. The other possibility would be for the unpaid interest to be carried over to the next financial year's payments.

Image of a hand holding some keys

| Pixabay

The Executive, with Pedro Sánchez at the top, he has started a campaign against the banking sector, but he is also aware that he needs them to get out of this crisis as soon as possible. However, he has already imposed a harsh punishment on them with the imposition of new taxes.

It has to decide what is the best option for all parties, the action it takes will have to fit the interests of the European partners and the supervisors. Of course, without breaking the bank.

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