April 21 () –
The Bank of Spain has observed “room for improvement” in the information that the bank gives to its clients on the measures contemplated in the Code of Good Mortgage Practices, as stated in the 2023 Supervision Report that the supervisor published this week. .
The agency explains that in 2023 it has carried out a “specific” review on compliance by entities with the obligations to report on the measures contained in the two codes, the one intended for vulnerable debtors and the one focused on those who are at risk of vulnerability.
These obligations are basically to apply the planned measures, to be subject to said codes, to communicate their content to clients and to send the information to the Bank of Spain.
After collecting data, the Bank of Spain has confirmed that banks can improve the information they provide about both codes through their websites, in the communications directed to customers and in the training given to their employees with respect to these codes. .
In its Spring 2024 Financial Stability report published this week, the Bank of Spain explains that the use of Codes of Good Practice skyrocketed in 2023, although their volumes remain contained compared to the outstanding mortgage balance of the entities.
In 2023, banks received 61,428 requests to adhere to the Code of Good Practices, of which they approved 7,919, 12% of the requests received, and rejected 25,818, 43%. The majority of rejections, more than 80%, were due to the fact that the requests did not meet the objective requirements to benefit from the measures.
These data contrast with those of 2022, when the entities received 5,751 applications and approved 1,352 (23%), while they rejected almost 65%.
Regarding the credit quality of the operations that have benefited from the codes, the Bank of Spain indicates the existence of a “certain deterioration” in 2023. “Due to the orientation of these facilities towards vulnerable households or at risk of vulnerability , it was expected that worse credit quality ratios would be observed than for the entire housing credit portfolio,” he explains specifically.
Thus, it details that of the volume of debt subject to these codes, 46.9% correspond to doubtful restructured operations, which represents an increase of 1.5 percentage points compared to December 2022; 2.7% to non-restructured doubtful operations, with an increase of two percentage points, and 26.4% to operations under special surveillance, which increased by 5.3 percentage points.
It is worth remembering that at the end of 2022, the Government and the banks agreed to reform the 2012 Code of Good Mortgage Practices for vulnerable debtors and create a code for families at risk of vulnerability – the latter valid until the end of 2024 – before the rapid increase in interest rates by the European Central Bank (ECB) and the forecast of a worsening of the economy.
Thus, the Executive estimated at that time that these measures could benefit one million households, a figure that the Bank of Spain later reduced to 549,000 potential beneficiaries due to the better economic performance.
