As is the intention, hardening The monetary policy of the European Central Bank (ECB) closing HE credit faucet. Ascensions interest rates officer search make it more expensive loans and reduce your supply and demandThus, cooling the consumption and investments of economic units and reduce inflation. However, the level of restriction exceeds expectations. HE Bank of Spain Ha delayed his prediction about to get better The state of bank finances in the latest update of macroeconomic projections. Now wait to reject The maturity of loans starting in the last quarter of 2022 has been extended until the third of 2024 (i.e. 24 months of decline). They will then remain practically inactive for twelve months and they won’t come back to get better timidly second half of 2025.
On the other hand, the auditing authority calculated in march This credit will remain essentially stagnant in 2023 and grow by mid-2024. Inside Junerevised its forecasts and predicted a decline until the third quarter of this year and gradual recovery Later. However drop A lot has happened so far this year. more obvious more than I expected due to additional increases childrenworsening economic context and increase uncertainty. “Financing conditions are expected to be good” more restrictive than expected in previous forecasts mainly due to increases in interest rates, but also greater impact may have restrictions loan offer“, the governor announced a few days ago, Pablo Herández de Cos.
The Bank of Spain therefore now estimates that the loan balance will be paid off 2025 two points above level I’m in 2019When I expect a level in March and June between five and six points higher than then. The institution makes these calculations based on information it does not normally publish: outstanding balances notional and seasonally adjusted credit. They reflect the impact of net flows between new transactions and depreciationsAfter other factors, such as write-downs, revaluations and reclassifications, are discounted and adjusted for the behavior of the loan at particular times of the year.
Less supply and demand
The decline in loans is due to both banks Like him customersAccording to the latest survey on bank loans prepared by the Bank of Spain. On the one hand, criteria franchise and conditions some of the new loans difficult for five consecutive quarters. Beings perceive something higher risk of default are affected by the high costs of financing themselves and the scarcity of funds, making them reject more requests and impose higher species those who accept. On the other hand, demand fell in the first semester “mainly” due to the increase in the cost of credit. Additionally, companies foresee less investmentWhile there are more households pessimiststhey use theirs saving and they have worse prospects for the housing market.
Behind all this is the rise in ECB interest rates. unprecedented speed and scale: 4.5 percentage points compared to July 2022. main type currently at 4.5% (highest level since) May 2001), Meanwhile deposit facility (interest paid by the central bank on the money held in banks, more relevant in the current context) all time high 4%. As a result the average rate new mortgages In Spain, it increased from 1.38% to 1.38% at the end of 2021. 3.75% last July, consumer loans increased from 6.1 percent 8.05% and loans companies increased from 1.3 percent 4.74%. This caused: loan balance given to families one fell 1.6% so far this year (to 679.564 million) and companies A. 2.4% (to 472.147 million).
less GDP
The Bank of Spain’s prediction that loans will continue to fall is not because the ECB plans to continue raising interest rates. He even underlined that he would continue inflation forecasts unless there were any unexpected changes. Instead, it responds to the fact that each is. Interest rate hike lasts between 18 and 24 months It shows all its effects on financial conditions, economy and price level. Accordingly, the Bank of Spain now calculates that the contraction in credit supply will continue. It will affect growth to a greater extent More than I expected in June. Thus, rate increases were reduced by 0.6 points from interest. Spain GDP They will remove it in 2022 Some point in 20231.2 points in 2024 and 0.3 points in 2025.
This is not a phenomenon unique to Spain. ” granting credit exists in the euro area greatly reducedboth demand and supply. But we’re left with second scene, infection Tightening financing conditions economic activity “It’s real,” ECB vice president Luis de Guindos said a few days ago. As reported by the central bank last Wednesday, full credit Given in the Eurozone in August down 0.2%It turned negative for the first time since January 2015. The contraction in loans was effective in the decline. public administrations (-2.1%) has fallen for six consecutive months. Credit private sectorOn the other hand, the rise continues, but at a decreasing rate since a year ago and has reached the lowest rate since September 2015 (0.6%; 1% increase in households, 0.6% increase in companies).
Source: Informacion
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