The banking sector trusts that mortgage relief measures for the middle class will expire in November.

The Government has not yet made a final decision regarding the future of the New Code of Good Mortgage Practices, although it acknowledges that the current context is significantly different from that of a year ago in terms of interest rates. After its approval by the Council of Ministers in November 2022, following an agreement with banks, the temporary support measures for mortgage holders in financial difficulty could expire on November 23 (or May 23 in areas affected by the DANA storm), unless their validity is extended once again, as happened last year. However, banks are confident that the Executive will not prolong the plan again, which would give them greater flexibility to negotiate tailored payment solutions in each case and thus reduce the impact on their accounts through provisions. For its part, the Government indicates that it has not yet decided but does not rule out ending the aid.

These measures were introduced at a time of sharp interest rate hikes by the European Central Bank, which sought to curb inflation caused, among other factors, by the war in Ukraine. In just three months, the price of money rose from -0.5% to 1.5%, and continued climbing to 4% in September 2023. However, since June 2024, the ECB has cut rates down to the current 2%, allowing mortgage payments to fall considerably.

In addition, both the economy and the labor market have shown a more positive evolution than expected. This has reduced mortgage delinquency, despite the rapid increase in interest rates. The balance of unpaid housing loans fell from €14.522 billion in March 2022 to €11.380 billion in March 2023. Although it later rose to €12.408 billion at the beginning of 2024, it has now dropped again to €10.691 billion, levels not seen since June 2008. Considering that households usually take around two years to stop making payments after a financial shock, everything suggests that most have already overcome the impact of higher borrowing costs.

In a recent meeting with banking associations, the Minister of Economy, Carlos Cuerpo, stressed that the situation has improved considerably thanks to lower interest rates and the positive evolution of wages and household income. He noted that the Government will assess whether an extension of the measures is still necessary as the expiry date approaches. He also emphasized that, although no decision has yet been taken, the current economic context is clearly optimistic.

At that same meeting, representatives of the main banking associations — including CECA and AEB — expressed their confidence that the Government will not extend the Code of Good Practices again. They recalled that these measures were preventive and adopted in a very different economic context, and therefore they consider it unnecessary to maintain them.

One of the main unknowns is how many households have actually benefited from this aid plan. The last update from the commission in charge of monitoring compliance dates back to the end of 2023. When the measures were first presented, the then minister Nadia Calviño spoke of more than one million households either benefited or at risk of vulnerability, although these figures were merely potential. The Bank of Spain soon reduced the estimates to 549,000 potential beneficiaries and around 200,000 probable ones. Last July, Carlos Cuerpo stated that, up to May, 79,300 applications had been submitted under the two codes, and 11,600 had been granted, but no more recent official data is available.

The low level of use of the Code of Good Practices is seen positively by both the Government and the banks, who insist that the safety net was created as a preventive measure and has been available for those who truly needed it. The improvement in economic conditions has prevented mass access, confirming that a widespread negative impact never materialized.

To access the aid aimed at middle-class households, families must prove a maximum annual income of €37,800 (4.5 times the IPREM) and have taken out a mortgage before 2023 for the purchase of a primary residence of up to €300,000. In addition, the monthly installment must exceed 30% of household income, and the share of income devoted to repayment must have increased by at least 20% in the last four years. If these requirements are met, applicants may extend the repayment term of their mortgage by up to seven years, freeze the installment for one year, or switch from a variable to a fixed rate.