New warning from the Bank of Spain: to owners of residential real estate

The Bank of Spain has published a new warning for apartment owners due to today's economic situation.

Experts predict a challenging fall/winter

Based on high inflation, across-the-board price increases and new interest rate hikes, experts are predicting a challenging fall and winter for homeowners. They emphasize that all this will lead to an even higher monthly mortgage payment.

The Bank of Spain's forecast reduces optimism.

The Bank of Spain does not foresee any improvement for next year. In its latest macroeconomic forecasts, it raised its inflation forecast and cut its GDP growth forecast for next year. The banking regulator expects GDP to grow by 1.4% next year, seven-tenths less than the 2.1% forecast by the Sanchez government.

The Bank of Spain's worries

The Central Bank of Spain has expressed its concern for families who spend a large part of their salary on monthly mortgage payments, especially those who spend more than 40% of their income on loan repayments.

This exacerbates the problems with the ends of the month. In light of the current situation and with no forecast of improvement, the Bank of Spain expects that the percentage of people who carry large financial burdens could increase by 4 points, which would increase the number of families in this situation to 350,000, the Spanish newspaper reported.

Recommendations from the Bank of Spain

Because of the current situation, the Bank of Spain recommends that all families with a variable rate mortgage should replace it with a fixed one. With a fixed interest rate, the monthly payment amount will be the same each month. There are three ways to change from a variable mortgage to a fixed mortgage: modification through novation, modification through subrogation, and modification through rescission.

Important points:

• Experts predict a difficult fall and winter due to inflation and rising prices.
• The Bank of Spain expects an increase in the number of families carrying financial burdens.
• It is recommended to replace variable rate mortgages with fixed rate mortgages.