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ARCHIVED - Spanish banks consider freezing mortgage repayments for 1 year to cushion cost-of-living crisis

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The Euribor interest rates have risen by over 3% in the last year, putting pressure on property owners to make their monthly mortgage payments

<span style='color:#780948'>ARCHIVED</span> - Spanish banks consider freezing mortgage repayments for 1 year to cushion cost-of-living crisis

The banks in Spain are considering freezing mortgage repayments for a year in order to cushion the impact of rising interest rates.

This is one of the measures that the sector is considering presenting to, which has called on the entities to seek formulas to help debtors with the greatest difficulties.

This proposal has been brought by CaixaBank as a suggestion to the Ministry of Economic Affairs in Spain as a way to support people who have mortgages with Spanish banks and are having trouble paying.

In the last year, the Euribor, which banks use as their reference for mortgage rates, has shot up to 2.6% from -0.5% just one year ago. This steep rise in interest rates is affecting the ability of many homeowners who have variable rate mortgages to make their monthly mortgage repayments.

So far, the proposal to freeze repayments for a year has been received positively by the other institution, but as yet no final decision has been made as there are also other proposals and talks are still ongoing. In any case, sources assure that it is currently the most widely accepted measure.

Nor is it a definite proposal for the moment. It has not yet been specified from when the freeze would be applied and at what interest rate, and there are several other issues to iron out before it can be put into practice.

Gonzalo Gortázar, the CEO of CaixaBank – one of the four biggest banks in Spain along with Santander, BBVA and Sabadell – has assured that “a good part” of that bank’s clients, at least, will not suffer an increase in the cost of their mortgages because seven out of every ten loans signed in the last six years have been at a fixed rate rather than a variable rate, shielding those customers from fluctuations in the Euribor.

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