Mortgage Doubtfulness Improves In Spain: Families Increase Ability To Pay Mortgages

4 Jul 2022 | Blog

Spanish households are making good progress in terms of their ability to pay mortgage instalments. And the fact is that, since the first half of the year has gone by, after the worst part of the pandemic is over and at a time of high uncertainty in Spain’s economy due to inflation and the war in Ukraine, the dubiousness of the mortgage portfolio of Spain’s households continues to show a positive trend.

Do you know what mortgage doubtfulness is? A loan is considered doubtful when there are signs that the borrower will not be able to repay it, or if more than 90 days have passed without the agreed instalments being paid. In this sense, according to the Spanish Mortgage Association (Asociación Hipotecaria Española, AHE), in the first quarter of the current year, doubtfulness ratio was 2.9% at the end of March, below the 3% recorded in the previous three quarters. It was 3.1% a year ago. Data have been collected and made public by the Bank of Spain. This is the lowest figure when lending to households for the purchase of a residence since the last quarter of 2011, when ratio also stood at 2.9%.

The reason for this improvement? This is because the decrease in the doubtful balance (1.7% in the quarter and 4.4% in the year) was accompanied by an increase in the outstanding balance of credit for the purchase of property. Moreover, doubtfulness of consumer credit also improved in the first quarter of the year, with a ratio of 4.9%, compared to 5% in December and 5.5% a year earlier. In total, non-performing loans for households as a whole fell by 8.2% in the last year and their ratio stood at 3.7% in the first quarter, compared to 4.1% a year earlier and 3.9% in the last quarter of 2021.