Spain: Banks are preparing a massive sale of refinanced mortgages

A change in Spain’s banking regulations, taking effect in 2021, will cause most refinanced loans to be re-classified as non-performing loans. As a result, the Banks will have to dispose of them in order to keep their default ratios below 5%.

The refinanced mortgages are those currently being repaid under new flexible repayment conditions afforded by the Banks to their debtors. There is no specific number of refinanced mortgages in the Banks’ balance sheets but sources estimate that a new multibillion Euro market will be generated as a consequence.

Refinancing and restructuring represents 5.4% of the total credit in the Spanish sector following a 20% cut in a year, according to the latest data available from the Bank of Spain.

Meanwhile, the Banks and Funds have frozen the sale of block apartments after a new government coalition formed with the participation of the leftist party, Podemos Unidas. The Funds, fearing that the Government will replicate measures from Catalonia in the real estate sector, have decided to freeze new investments until the picture becomes clearer.

Between September 2018 and September 2019, the eight listed Spanish banks - Santander, BBVA, CaixaBank, Bankia, Sabadell, Bankinter, Unicaja and Liberbank - got rid of almost €37bn of NPLs and in 2019, BBVA was third in Europe behind Italy’s UniCredit and Germany’s DVB in the total volume of assets disposed of.

Sources: Expansión, El Confidencial

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