Five major banks have already renegotiated the terms of more than 100,000 home loans due to families’ difficulties in paying monthly installments.
Caixa Geral de Depósitos, the last of the major banks to report, said this Saturday that it had restructured more than 40 thousand loans by October.
As for other banks that have already presented their results, Santander Totta reviewed more than 36 thousand home loans from the beginning of the year to September. Novo Banco has completed 17,700 renegotiations and BCP has completed over 16,000 renegotiations.
BPI did not disclose the total number of renegotiations, saying only that loans whose terms were renegotiated before September had a total value of 950 million euros. By government decree (80-A/2022) alone, 414 million euros worth of loans were renegotiated, covering 3,400 clients, he said.
Thousands of loan renegotiations are carried out under government legislation, but most are carried out through a commercial agreement between the customer and the bank (commercial renegotiation).
Loan renegotiation can be done in several ways: by reducing the “spread” (the bank’s commercial profit), increasing the loan repayment period or a grace period when repaying capital (for example, for one year the client pays only interest, which reduces the monthly payment but capitalizes the shortfall in future).
Rising interest rates have created problems for many families paying off their mortgages as they impact adjustable rate contracts with significantly higher monthly payments.
To mitigate the immediate impact, banks renegotiated loan terms and the government took measures such as subsidizing housing loans for struggling families (subject to certain conditions).
On the 2nd, a mechanism came into effect for two years whereby customers can ask the bank to make a fixed monthly payment of less than the current amount.
On Saturday, CGD said it was receiving an average of about 50 requests a day to set mortgage premiums.