The banking sector has reached an agreement to help struggling families cope with the payment of their home mortgage loan amidst high inflation and rising interest rates.
Dialogue with the authorities has allowed for the expansion and strengthening of the Code of Good Practices for vulnerable families, approved in 2012, and the addition of a new Code for debtors at risk of vulnerability.
This provides peace of mind for families and allows them to anticipate circumstances that may affect their payment capacity.
Specifically, the following measures have been agreed upon:
Code of Good Practices for Vulnerable Families
1. Annual household income below €25,200, where the mortgage payment exceeds 50% of income, and the mortgage burden on family income has increased by 1.5 or more. Restructuring options are maintained, and some conditions are improved:
- 5-year grace period.
- Application of a reduced interest rate during the grace period (Euribor -0.1% compared to the current +0.25%).
- The deferred capital can be converted into a final installment, prorated across the resulting installments, or both options can be used.
- Extension of the amortization period up to a total of 40 years from the date of granting.
- Payment in kind (dación en pago) can be requested within 24 months (compared to the current 12).
2. Annual household income below €25,200, where the mortgage payment exceeds 50% of income, and the mortgage burden on family income has increased by less than 1.5:
- Grace period of up to 2 years.
- Application of a more favorable reduced interest rate during the grace period.
- Extension of the loan term by up to 7 years, with a limit of 40 years from the date of granting.
Code of Good Practices for Families at Risk of Vulnerability
- Debtors with temporary liquidity problems, annual household income below €29,400, where the mortgage payment exceeds 30% of income, the mortgage burden on family income has multiplied by 1.2, and loans are below €300,000.
- Option to freeze the installment (June 1, 2022 installment) for one year.
- Application of a subsidized interest rate (an interest rate that implies a 0.5% reduction in the net present value of the loan).
- Extension of the loan term by up to 7 years, with a limit of 40 years from the date of granting.
Additionally, early repayment and novation fees and commissions are suspended for one year, as is the possibility of changing from a variable to a fixed rate.
Measures are also introduced to reduce the cost of contract modifications, such as the exemption from the Stamp Duty Tax (Impuesto de Actos Jurídicos Documentados) or a specific regime for notary and registrar fees.
The agreement reached preserves the soundness and proper functioning of the Spanish mortgage market, which is key to social well-being and economic progress in Spain.
Regulations related to the Code of Good Practices
- Resolution of January 17, 2023, of the Secretary of State for Economy and Business Support, publishing the list of entities that have communicated their adherence to the Code of Good Practices for mortgage debtors at risk of vulnerability.
- Royal Decree-Law 19/2022, of November 22, establishing a Code of Good Practices to alleviate the rise in interest rates on home mortgage loans, amending Royal Decree-Law 6/2012, of March 9, on urgent measures for the protection of mortgage debtors without resources, and adopting other structural measures for the improvement of the mortgage loan market.
- Resolution of November 23, 2022, of the Secretary of State for Economy and Business Support, publishing the Agreement of the Council of Ministers of November 22, 2022, approving the Code of Good Practices for urgent measures for mortgage debtors at risk of vulnerability.
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