Spain’s banks overwhelmed with requests for mortgage relief

Banks are being overwhelmed with requests from customers for mortgage payment holidays to help mitigate the impact of Spain’s coronavirus epidemic, which has led to hundreds of thousands of job losses during a strict lockdown.

Lenders have declined to say how many requests they have had, but banking staff told Reuters they had been inundated.

«We have received 2,000 queries as of last week, » said a head of client solutions at a top-five Spanish bank, who did not want to be named because of the sensitivity of the topic.

Many did not meet even «the most basic conditions» for mortgage relief set by the government, the source added.

He said the bank was trying not to lose clients who were meeting their payment obligations before the crisis and offering them options such as six-month extensions to the terms on their mortgages.

Mortgages represent around 40% of Spanish banks’ gross loans, accounting for close to €500 billion, according to Bank of Spain data.

Another retail banker at a leading lender said it had received more than 1,000 queries through online channels in just one day and staff were ill-prepared to deal with that number.

The Spanish Mortgage Association estimates that there were around 7 million residential mortgages by the end of 2019.

On March 31st  – as part of an ever widening raft of economic support measures in a country where the virus infected and killed thousands and paralysed the economy – the government extended the mortgage payment holiday entitlement for eligible customers to three months. 

However, tough qualifying conditions – such as the mortgage payment having to be more than 30% of household income, limits on the level of that income and workers having to present certificates proving they are unemployed – means many may not be able to take advantage.

«With these harsh conditions the (payment) moratorium is doomed to fail» said Manuel Pardos, head of Spanish consumer group Adicae.

Original Story: Reuters | Jesus Aguado 
Photo: Big Stock Photo
Edition: Prime Yield