The ADICAE (Association of Banks, Savings Banks and Insurance Users) has already warned several times that many mortgages that the pandemic has imposed a moratorium on will become dubious and lead to problematic situations.
INE (National Institute of Statistics of Spain) confirms this: in the six months of 2021, there were 6,450 foreclosures on primary housing, compared to 5,361 that were recorded for the whole of 2019.
INE statistics show that 60% of these house foreclosures come from mortgages signed before 2008. The pandemic has exposed an additional volume of bubble mortgages that have weathered the crisis of the past decade but have not been able to withstand the current economic climate.
The association demands that financial institutions do not take advantage of many mortgage consumers’ vulnerable position, ask for acceptable conditions for refinancing loans and avoiding foreclosures, and invite the Bank of Spain to monitor the situation and take the necessary measures.
The vulnerable position of many mortgage consumers is forcing them to go to the bank to renegotiate their lending conditions, and the legal moratoriums caused by the pandemic are only part of this phenomenon. INE registers between 20,000 and 25,000 innovations every month, and the growing number of foreclosures on real estate shows that some of these mortgages end up unfulfilled.
Concerning these moratoriums, ADICAE had already warned that they were insufficient, covered a too limited period, and, above all, were not available to a significant portion of consumers. The Association of Banking Employers itself noted that they reached only 10% of the volume of existing loans, contrary to consumer needs. In 16% of requests received by the association, consumers are asked for advice on moratoriums or defaults on mortgages due to unemployment and ERTES hit by the COVID crisis.
More alarming, however, is the fact that there is still a hidden but growing volume of mortgages issued prior to the 2008 crash that are causing problems. These loans still demonstrate the abuses of that era of decontrol of real estate, including disproportionately high costs and amounts that many consumers cannot afford.
ADICAE is pushing for a two-year legal moratorium on property restitution and divestment to avoid uncertainty and create enough time for the long-awaited economic recovery. The association once again demands that banks do not take advantage of consumer vulnerabilities and that banking supervisors, especially the Bank of Spain, monitor the development of the situation with mortgage lending in the country and take the necessary measures to protect consumers.