In a pre-election campaign this Sunday, the President of the Spanish Government Pedro Sánchez announced a new precautionary law to help youth under 35 and families with a gross income of less than 37,800 euros (or double that, 75,600 euros) per year. euros if they buy in pairs) and those who do not have access to buy a house due to lack of savings, a guarantee of up to 20% of the price for the bank to give them a mortgage.
As analyzed by benchmarking and mortgage advisor iAhorro, this measure means: instead of financing only 80% of banks, sales fee It finances 100% from housing to mortgage holders because 20% through ICO (Official Credit Institution). Of course, future mortgage holders must have minimal savings to pay “the costs of buying and selling and managing the mortgage, which is normally about 10% of the price of the house.”
Likewise, Simone Colombelli, director of iAhorro Mortgages, warns: “Giving you a guarantee helps you skip the first step to accessing housing, but it also comes at a cost: if the bank provides financing, instead of financing 80% of the price. 100, the installment that the mortgagee will have to pay each month will increase and therefore the risk of indebtedness will also increase. with the advice Bank of Spainbusinesses usually do not mortgage people who will set aside 30-35% of their monthly net salary to repay their mortgage.
What happens if they exceed these indebtedness percentages? iAhorro spokesperson assures that “With the housing bubble, we can go back to what we had in 2008. At the time, people were paying more than the recommended monthly mortgage payments, and when the crisis broke out, many lost their jobs and could no longer afford these high payments.”“Follow the recommendations of the Bank of Spain and do not exceed the debt ratio, the limits of which are very clear in the Mortgage Law 2019,” advises. Therefore, there are several options to avoid borrowing more than recommended: buy a cheaper house or extend the mortgage to pay lower installments.
What housing can beneficiaries afford?
From the mortgage comparator, they calculated the maximum price of the house that could be bought. Young people under 35 who earn 37,800 euros gross per year with new government assistance (maximum set which will be around 28,300 euros in net salary). Of course, without exceeding the debt ratio.
If they manage to sign a fixed mortgage at a 4% TIN (many banks already position their products at a fixed rate around this threshold) and with a 30-year repayment period (the maximum rate that banks normally give), the limit price will be €172,896. In this case, the mortgagee will pay a monthly fee of 825.42 euros, which is exactly 35% of his net monthly salary if the annual payment is divided into 12 payments.
A measure that “could benefit 95% of young people”
“If the government is to actually apply this measure to those who earn the most gross 37,800 euros per year, or those who, if they buy in pairs, collect 75,600 euros gross per year, the Ceiling is very high, because around 95% of young Spaniards can benefit from it”, Points out Simone Colombelli, who adds that “when it comes to those who buy in pairs” they can choose homes for around 345,000 euros.
And the annual gross annual salary of 37,800 euros (28,300 euros net per year), set by the Government, is well above the average salary for young people aged 16 to 35 in our country, according to the National Institute of Statistics. So, according to INE, Young people aged 16 to 29 earned a total gross of 18,019 euros per year, on average, in 2022 (the last year for which figures are provided); this increased to a net €19,343 among those aged 30 to 44. .
For this reason, For those under the age of 29, the limit will be the monthly fee of 525.55 and the payment of the maximum price of the residence.will be 110,085 Euros with the same conditions as the previous example. In the case of citizens aged 30 to 44 (although the benefit is only granted up to the age of 35), the maximum monthly payment will be 564.17 euros and the limit price of the house will be around 133,800 euros.
Spain is the fifth country in Europe in terms of youth emancipation.
The fact that young people in Spain are finding it increasingly difficult to liberate themselves is nothing new, but is further confirmed by the latest data from Eurostat, corresponding to 2021: Only 35.5% of young people between the ages of 18-34 in our country are independent orIf we compare it with the data of 2012, when it reached 45.9%, it is the n percentile that fell by more than ten points.
Also, if we compare the data from Spain with the data from other European Union countries, we see that our country ranks fifth in the ‘ranking’ of European countries with the lowest percentage of emancipated youth. Croatia occupies the first place with only 23.5% of independents (or 76.5% of young people aged 18 to 34 living at home with their parents); second place is Greece with 27.1%; the podium was closed by Portugal, where the percentage of emancipated youth was 27.7%; and just ahead of Spain, only Italy remained independent at 29.5%.
On the contrary, In Denmark (84% of their youth already live outside their parents’ home), Sweden (82.70%) and Finland (81.80%), those under 35 have more opportunities to be independent.