Mortgage renegotiation begins to hit pre-pandemic levels, after peaking during home confinement. This type of operations has been reduced in recent months by around 4% -5% of the portfolio over total new home loan operations, compared to 18% in May 2020, the highest point, and 16% in June of that year. As reflected by the Spanish Mortgage Association (AHE) in its Statistical Bulletin, mortgage renegotiations were around 3% of the portfolio before the pandemic.
The increase in renegotiations, down in recent years after overcoming the last great crisis, came from the hand of the mortgage moratoriums launched first by the Government in March 2020 and, a month later, by the banking sector itself . This measure allowed families and companies to defer payment of their installments for up to one year in the case of mortgages and for up to six months in the case of consumer loans.
However, both the Executive and the bank, after several extensions, shelved these measures at the end of the first quarter of the year, after the application period expired. However, from the financial sector they have insisted on several occasions that the entities, despite the fact that the measure is no longer in force, will continue to negotiate with the clients most affected by the crisis formulas to alleviate the payment of their obligations and thus avoid defaults , one of the great fears of the sector before the rise that can suppose in the delinquency.
From the beginning of the implementation of the moratoriums, the bank deferred credits amounting to 56,745 million euros, which represented 8.7% of the total mortgage and consumer credit portfolio. However, the bulk of these deferrals already expired in the second quarter of the year.
56,000 million deferred
Specifically, through the measure launched by the Executive -which lasted from March 2020 to March 2021- 225,967 operations were approved to postpone 20,257 million credit in mortgages and another 373,092 operations, to suspend the payment of 2,823 million in consumer loans. On the other hand, through the banking initiative, more than 843,332 clients were benefited who deferred payments for a total of 33,665 million euros between mortgages and loans for the acquisition of goods. According to the Bank of Spain, as of the second and third quarters of the year, the bulk of the moratoriums granted by financial institutions will begin to expire. The agency indicated in its latest Financial Stability report that at the end of last year, of the total credit that had been deferred, some 32,000 million were still in force, 54% of the moratoriums.
From this volume, around 85% expired during the first half of this year, with maturities concentrated especially in the months of April and May, with more than 50%, since the mortgage deferrals lasted a maximum of one year. Thus, by 2022 barely 2% of the deferrals granted will remain active.
Bank delinquency continues to decline despite the pandemic. The sector closed June with a NPL ratio of 4.34%, the lowest level since March 2009. Precisely, the postponement of loan payments has allowed clients not to be doomed to default due to the effects of the crisis and to the sector, not to increase arrears. However, despite this decrease, the entities assure that there will be an increase once all the moratoriums and the reliefs put in place expire.