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Habitual questions on debts and sobreendudamiento

To: What is the sobreendeudamiento?
It is the situation in which there is the citizen or family that has contracted debts in excess and cannot face to all. His debit overcomes his assets, cannot pay and turns in insolvent.

To: What factors unleash the sobreendeudamiento?
The Spanish Bank aims at three decisive factors as causers of the familiar sobreendeudamiento: the increase in the price of the soil and the housing - principal person in charge of the high level of risk and vulnerability that are supporting the home economics - the reduction of the bank interest rates and the false confidence of the consumers in his labor stability.

To: What other causes do they influence? The immediate causes of the sobreendeudamiento of the consumers are two: the excessive assumption of debts (sobreendeudamiento I activate) and the supervened incapability to face on the credits for unforeseen causes (sobreendeudamiento debit).

The active sobreendeudamiento can originate for lack of control of the budget, for unforeseen expenses, for the irrational use of the credit cards or for enjoying one or several credits, without having studied in advance the personal financial situation of the moment or the foreseeable one during the validity of the credit.

The passive sobreendeudamiento usually owes to a decrease of the income, motivated by the unemployment, the illness or the death of one of the spouses, abandonment of the employment of the woman to take care of the children or the tributary sanctions, etc. Undoubtedly, the unemployment valuation is the macroeconomic variable that more influences the non-payment of the familiar debt, more than the interest rates or that the volume of the credit, which in our country reaches the number for 650.000 million euros, three times more than in 1996, what there supposes 114 % of the available gross revenue, more than the average of the countries of the Euroarea.

To: How can we know our indebtedness limit?
The experts think that there must not be assined to the payment of accounts any more than 20 % of the income. This percentage can be minor (between 12 % and 15 %, like maximum), according to the standard of living of the area in which one resides, the price of the rents, of the expenses of feeding and of other overheads. Also, in case of contracting debts of long duration, like the buy of an apartment, it is necessary to consider not only the financial situation at the moment of contracting the debt but the foreseeable one during the time that is going to last. It is considered that someone is sobreendeudado when the volume of his debt is three times superior to his revenue when the whole of the debt overcomes 75 % of the clear patrimony of the hearth; or when the weight of the load of his debt overcomes 40 % of his annual revenue.

To: Are we protected the consumers?
Neither up to the date, nor the Spanish Law of the Credit to the Consumption of 1995 - neither adaptation of the European board of 1987 - nor the new European proposals bear in mind the curative treatment of the sobreendeudamiento. In a country in which 72 % of the citizens has benefited one day from a credit it continues and there is no specific law that protects the families of the sobreendeudamiento.

In France, for example, the courts can change the conditions of return of the loan in case of financial difficulties of the consumer.

Only the Law Credit 7/95 to the Consumption contemplates preventive measurements centred especially on the offer, publicity and on the content exigible of the contracts. Also, the Law 28/98 of Installment plan of Real estates allows or authorizes the judges to indicate new period or to alter the fixed ones determining in his case the extra charges in the price for the new payments postponements.

Nevertheless, this exceptional Thursday faculty needs of a just cause, as the unemployment, the long illness, the familiar misfortunes or the industrial accidents.

To: What happens if the debt gives place to the sequestration of the goods?
The Law of Civil Indictment declares inembargables the minimal revenues, prohibiting the sequestration of salaries, wages and pensions lower than the professional minimal salary. Nevertheless, once this income is in a checking account there happen to be positive balances and can become impeded.

To: What percentage of the salary can be impeded?
There can be impeded the wages or pensions that are superior to the Interprofessional Minimal Salary (SMI) bearing in mind the following scale:

The quantity that exceeds the double of the SMI, in 30 %
The quantity that exceeds the triple of the SMI, 50 %
What it exceeds up to four times of the SMI, 60 %
What it exceeds up to five times of the SMI, 75 %
What it exceeds even more than five times of the SMI, 90 %
The judges will be able, bearing in mind the familiar charges, to reduce between 10 % and 15 % the previous percentages.

To: What happens in other countries?
In France, for example, a law was approved in 1989 that contemplates the difficulties of the consumer sobreendeudado. The above mentioned law, in addition to preparing and prohibiting certain conducts of the credit companies, restores a procedure to arrange the situation of inattention of payments, establishing two procedures that are alike a species of civil failure.

The first solution route is friendly, in case of not reaching an agreement with the creditors, it brings in the universal judgment, with subsidiary character. In this judgment the court can, between other things, paralyze the sequestrations and establish like final solution a reduction of the interests or of the interest rates and even of the principal one and/or indicate new period to pay.

In Belgium there is a procedure for all the not business-minded physical persons who could not pay his defeated debts or on the verge of winning, that also protects the persons who in view of his debts and income foresee to come to this situation.

The Belgian consumer can present a request before the Judge of Sequestrations of his domicile and it will be helped by a debt mediator who will negotiate with the creditors. If all the creditors accept the plan, the mediator submits the plan to the judge who raises record of the agreement of the parts. If a friendly agreement is not reached, the judge will decide between reducing the interest rates, staggering the debt, postponing momentarily the payment of a debt, asking the consumer for the change to one more apartment barato†¦

Source: Consumer.es

His mortgage might change even in 795 euros depending on the bank

One is worth taking a time deciding which is the mortgage that more is convenient for us. If we choose badly we can pay more of the account as it is deduced of reading the following paragraphs:

The users who hire a mortgage can find differences of up to 9,8 % in the amount of the monthly quotas depending on the bank or box with the one that they her sign, what supposes a difference of up to 795 euros per year, according to a study prepared by Facua.

The person in charge of Communication of the Consumers' Federation in Action (Facua), Rubén Sánchez, told yesterday in Seville that this information takes a mortgage as a reference to the first housing for 140.000 euros, which there would represent 80 % of the value of appraisal of the building, to be paid in 25 years with a variable interest.

The comparative study on 27 products you would mortgage offered by 16 financial institutions - seven on line and nine traditional ones - it selected a loan which quantity comes closer the average amount for 138.959 euros of the whole of mortgages constituted in Spain during the last October, last date analyzed by the National Institute of Statistics.

Sánchez pointed out that the monthly salaries go from 673,26 euros of the most economic offer up to 739,37 euros of the most expensive, bearing in mind the Euribor of December, 2005, which was located in 2,7 %.

Source: abc.es

The families get into debt. The banks win

We all know about the continuous increase of the familiar indebtedness that it is taking place in Spain. Most of the families have a mortgage carried away, some personal loan and perhaps a credit car. The banks and boxes rub the hands with the current situation because they see increasing his benefits of considerable form.

For sample two recent articles about “the good march of the banks”:

The Popular Bank increased his benefit 34,8 % in 2005
Finished article in The Country

The Popular Bank obtained an attributed net profit for 877,74 million euros in 2005, what supposes an increase of 34,8 % with regard to 651,36 millions that won the previous year, he informed today the entity the National Commission of the Stock market (CNMV).

These results, which overcome the forecasts of the analysts, were possible thanks to the minor provisions that the entity had to provide for possible insolvencies and to the dynamism of the credit business, which grew 22,4 %. The business of the mortgage credit behaved especially well and increased 25,6 %. Yesterday, Box Madrid also announced that the reason of the progress of his results is a fruit of the good march of the credit business.

Box Madrid wins with the mortgages
Finished article and more information in CARDINAL MAGAZINE

Box Madrid obtained in 2005 a net profit for 841,26 million euros, what supposes an increase of 17,1 % with regard to 2004, when it gained 718,4 millions. This progress of the numbers takes as a prime mover the increase of the credit activity in 26,5 % up to being located in 72.558 million euros. In particular, the mortgages have promoted 34 % and the credit to companies, 28,2 %; while, the expenses have increased of moderate form, 2,2 %.

The margin of development of the entity of Madrid, which better reflects the activity purely bank, grew in 26,8 % and the business volume was located in 180.177 million euros, 21,6 % more than in 2004.

Mortgages of private capital

There are clients who have some free money and raise us that, if salt the opportunity of someone who looks for financing but it cannot come to the bank route, they are ready to give it to him in exchange for an attractive interest rate that promotes his capital and should compensate the risk”, tells David Navarro, of the signature Active Management of Lawyers, which has intercome up some mortgages of private capital. He adds that the lenders accustom to establishing requirements as for amount and interest rate: "normally there have to be operations for more than 12.000 euros (although talking each other of persons with urgencies for non-payments they can demand up to 60.000 euros), and remunerated to an interest superior to 10 %”.

Already to weigh of that Active Management of Lawyers has publicized the product in search of clients received, Navarrese makes sure that the mortgages of private capital “are an extreme and solution not advisable at all”.

He thinks that who looks for this money is usually already in mulberry situation, with the route of closed bank financing, “but he advises himself him to explore first the possibility of the relatives' help because, if not, it is getting into the final straight line, since if he does not pay there is executed the mortgage guarantee that always accompanies these loans and remains without his housing”.

The notary José Alberto Marí-n makes sure that, for the experience lived in his office, this accustoms to being the most frequent ending of the loans of private capital when who comes to them drags problems of non-payment. “In the end one comes to the achievement of the building because, in fact, many of the lenders are persons related to the real estate sector and it is there - where they find the benefit, in which the client stops paying, because then they offer him like solution to cancel the debt in exchange for remaining with the property of the building and allowing him to keep on living there - how tenant through a time”.

Source: The avant-garde

Banco Gallego throws two new mortgages, with an Euribor+0,10 % and a period of lack of 30 years

The mortgage ‘CeroDiez‘ offers a financing superior to 400.000 euros from an Euribor + 0,10 % to the clients who commit themselves to a minimal annual expense with credit card and to an annual saving in funds or pension plans.

For his part, the ‘Plan 30 ′ will allow to the client to finance the loan of the housing and at the same time to generate patrimony across the investment of the capital. For it it offers a period of lack of 30 years for the payment of the financed capital, only paying monthly the interests, staying in hands of the client the decision of when amortizing the capital along the life of the loan.

Banco Gallego foresees to increase the reception of volume of mortgage business in 40 % and to increase 20 % the number of new mortgage clients with these products, which will be supported of a national advertizing campaign of three months.

Source: Europe Press

Some young people chooses for mortgages of 50 years like íºnico resource to achieve a housing

Although the average time of life of a loan for housing buy in Spain, according to the information of the School of Registrars of the Property, is 24 years and a half, entities as the Santander and the Caixa already offer credits for apartment buy in a maximum term of 40 years, more of the triple of what it was offered a few years ago. And there is still margin so that this term is extended. The box BBK already commercializes mortgage credits to 50 years.

Nevertheless - the national mortgage market is still very far of that of the United States, where some mortgages are signed to 100 years. Japan is other of the countries where this type of credits happens from parents to children along with the rest of the heredity. Many families get into debt during half a century to acquire a good as scarce as the housing.

Although the Spanish Bank and other institutions do not stop being alert on the high level of indebtedness of the Spanish families and the derived risks of the already real increase of the interest rates, the clients of the financial institutions receive new and more and more attractive credit offers. This way - in the mortgages of variable type, the amortization period comes in practice totality of the entities at the age of 30, many, like Unicaja, they lengthen it up to 35 years but someone have increased it up to 40 years, and even even the 50.

Banco Santander has been one of the first entities that has thrown a mortgage to 40 years, so called Super Revolution. It offers the possibility of being provided for five years with a more limited quota, on having been paid only, be of interest without having to amortize capital during this term. For the client who does not want this lack period, the type that will apply itself the first year is 2,95 per cent.

To the client who decides to use this lack period there is applied an interest of 3,55 per cent per year in these years. The entity tells that they have taken these five years on having been considered to be that is a term of sufficient time so that the young man manages “a labor stability, consolidates his salary and benefits from the possible increases that can take place in the price of the housing”.

Box Madrid has been the last entity in there joined in the segment of young clientele with the commercialization of the Mortgage 40, which is provided with a pay-off period of up to 40 years. The interest rate is indexed to the Eurí-bor more a margin of 0,75 points, with the possibility of choosing a fixed percentage of 2,99 per cent during the first five years.

With the Mortgage 40, Box Madrid tries to reach the success of his previous product directed to young people: the card MTV, of which only in three months it commercialized more than 40.000 units, when the initial target was 50.000 cards in the course of one year. Also, The savings bank is counted with the Mortgage Quota by Zero, which allows to postpone the payment of the quotas during the first year, and the Quota Released, with that the quotas of the loan can adapt themselves to pay a minor amount at first.

Caixa Catalunya commercializes a loan for young people to be amortized in 40 years and with an initial capital lack of up to five years on the condition that his holders do not overcome the age of 32 years. Between other advantages, which acquire this product will be able to benefit from the application of a system of increasing-charge depreciation of quotas that will allow them to go increasing them annually according to a percentage previously agreed. The mortgage to 40 years can be hired to fixed or variable type and it is provided with a bonuses system in the interest rate that is fixed according to the link of the client to the box. The amount of the loan cannot be superior to 90 per cent of the expert value or price of sale.

The Caixa has incorporated in his offer a new version of his Young Mortgage, which principal characteristic is a pay-off period of up to 40 years and a lack of up to ten years. This mortgage is the only one of the market that offers a lack in a credit with revolving, that is to say, that allows to the holder to have again on behalf of the capital amortized “to face to new needs for financing, like reforms or the buy of a vehicle”, they tell in the box.

Source: diariomalagahoy.com

The mortgages reunification will grow 27 % in 2006

It is the young hake that bites the tail

The ANPB thinks that this increase owes to the increasing indebtedness of the families and to an upward stage of interest rates, a circumstance that will provoke, according to the ANBP, a major competition between the banking institutions before the increase of the potential mortgage clients.

Also he emphasizes that 2006 will be the year of the “mortgage revolution” due to the slowest growth of the real estate market, the abandonment of the historical minimums of the interest rates, the immigrants' irruption with stable labor situation and to the good march of the Spanish economy.

According to the ANPB, during the present year top mortgages will appear at the age of 50, with the possibility that in the half term they arise “inheritable mortgages, an already existing product and with tradition in other countries”.

Also, he underlines that the barrier that indicates the term which the age of the petitioner joins has happened from 70 to 80 years, and that it can still rise more.

To his judgment, before the possibility of an increase of types, the payments protection insurances will be promoted, to answer in case of unemployment, illness or other adversities that the client could suffer.

Source: EFE

Adicae warns that mortgages of long term of duration are not of benefit consumer

To lengthen up to 40 or even 50 years the pay-off period of the mortgages does not suppose ‘any additional benefit’ for the consumer, he warned today the Users' Association of Banks, Boxes and Insurances (Adicae).

The association adds that this way they end up by going out more expensive and the holder has more possibilities of having problems, so much of personal nature - illness or unemployment - as economic - increases of types or recessions-.

According to his calculations, with the current interest rates, the monthly quota of a mortgage for 150.000 euros to 25 years would be 711 euros and the entire interests that it would be necessary to pay in this term would amount to 63.000 euros.

Nevertheless, if the term to return the same 150.000 euros was increasing to 40 years, the entire interests would go off to 107.000 euros and to 139.000 if it was a mortgage to 50 years, what does not compensate, in opinion of Adicae, the low monthly salaries for 532 and 483 euros, respectively, although they are ‘any more commodes of paying’.

Another disadvantage, says the association, is that the longer is the term of return of one more mortgage it is taken in amortizing the given capital and the major are the interests, so that we can be ‘years‘ attending to quotas without having done another thing than paying interests.

As example, Adicae makes sure that, after paying for fifteen years a mortgage loan for 150.000 euros, they still would stay for returning to the bank 74.000 euros if we have hired it to 25 years; 113.000 euros for a term of 40 years and 125.500 euros if the expiration is to 50 years.

According to this association, although ‘from diverse sectors it has been idealized that these offers facilitate the access to the housing of the young people’ and demonstrate the efficiency of our financial system, it would be preferable to take other measures like impelling the construction of protected housing or making the requisites more flexible to obtain public helps.

Another alternative would be to move to the housing the 'leasing', that is to say, the rent with call option that is used at present in the managerial ambience or in the financing of motorcars, what would have the beneficial effect of relaxing the price of the rents and the grade of indebtedness of the Spanish families, as asks the Spanish Bank whenever it has occasion.

Adicae is useful to demand once again the procedure of a Law of Sobreendeudamiento Familiar, who should foresee, for example, to postpone the payment of the quota during a certain period in case difficulties arise to satisfy the debt, like loss of employment or death of a participant.

Source: EFE

The BBVA throws an account housing for young people with a compensation that 7 % reaches

The BBVA has thrown an account housing directed to young people of ages understood between 18 and 30 years that offers a compensation of up to 7 %, with the target to contribute solutions to the acquisition of the first housing for this segment of the population, he informed yesterday the entity.

The account, so called ‘Formula Housing Blue Joven’, will have a remuneration of 1,5 % and will add 5,5 % additional for those that should end up by hiring the mortgage with the financial institution.

This additional profitability per year of 5,5 % will subscribe at the moment of formalizing the mortgage and one will be anticipated on the average balance accumulated throughout four years, that it is the maximum period of hiring of an account I save housing.

The young people who have this product employed will be able to gain access, also, to a personal loan to 5,5 % with lack of two years, which will do of bridge between the expiration of the account and the hiring of the mortgage.

Source: The Digital Mail

The mortgages volume in Spain overcame for the first time 700.000 million Euros

This interannual increase confirms once again the good march of this business, which registered in absolute terms a growth for 144.601 million euros in these twelve months, while in the first ten months of 2005, the increase was 122.852 millions.

Only in October, the mortgages in force in Spain increased in 11.736 million euros, they add the information of the AHE, which predicts that the interannual valuation will grow to closing of December over 25 per cent, what it will turn 2005 in the most expansive year of the long cycle that began in 1996.

The association tells that this increase has been possible thanks to the low interest rates, despite the increase of the price of the decided money the last first of December for the European Central Bank, that they have allowed to absorb, partly, the "important" growth of the prices of the housing.

Nevertheless, he warns that this situation might change in 2006 with the increases foreseen in the interest rates, which they might place to the interbank reference most used to calculate the interest of the mortgages, the Euribor, in 3,3 per cent in the last trimester of 2006 opposite to 2,8 current per cent.

Source: finanzas.com

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