Home News Spain to approve mortgage support for more than 1 mln households

Spain to approve mortgage support for more than 1 mln households

by admin
0 comment
  • Measures support vulnerable families with an income threshold of €25,200
  • The threshold for middle-class customers is set at 29,400 euros
  • Measures include extending loan repayments for up to seven years
  • Action also envisages grace period and repayment freeze
  • Plans to finalize on Tuesday after discussions with banks

MADRID, Nov 21 (Reuters) – Spain’s government on Thursday approved a mortgage relief package for more than one million vulnerable and middle-class families, including extending loan repayments for up to seven years, it said. The Ministry of Economy announced on Monday.

The ministry said the new measures, which will be given the go-ahead by the government’s cabinet, will be adopted pending final negotiations with the Spanish Banking Association.

In Spain, where about three-quarters of the population are homeowners, most of whom opt for variable rate mortgages, they are exposed to accelerating interest rate increases.

Under this framework, banks will provide mortgage support to vulnerable families through a modified industry-wide code of good practice. The income threshold is set at €25,200 ($25,815).

Vulnerable households can restructure their mortgages at lower interest rates during a five-year grace period. This grace period has already been set in the first industry-wide Code of Good Practices for 2012.

The grace period allows the borrower to delay payment of the principal of the loan without being charged late fees, without leading to default or cancellation of the loan.

The ministry said the debt forgiveness period has been extended by two years, including the possibility of a second round of restructuring if necessary.

Vulnerable families who spend 50% or more of their monthly income on mortgage payments, but do not meet the conditions set by the previous Code to raise their mortgage payments by 50%, will be granted a two-year grace period. available.

The government will also implement new good practice standards setting an income threshold below €29,400 for middle-class families at risk of vulnerability.

In such cases, the lender will ensure that the mortgage burden is equal to 30% or more of the income and the expenses are at least 20%.

Mortgage exemption will be implemented next year.

($1 = 0.9762 Euro)

Reported by Jesús Aguado. Edited by Emma Pinedo, Sam Holmes and Muralikumar Anantharaman

Our criteria: Thomson Reuters Trust Principles.

You may also like