While floods have devastating effects on the property and lives of citizens, they also casualties in a way that will have negative effects on banks credit flow, financial stability and the country’s economy. Thus, more than one 81,000 mortgaged homes located in: flood zones Those most exposed to such disasters in Spain. These houses are a collection guarantee Possible for the bank in case the customer cannot make the payment deterioration or devaluation A representation due to flooding risk of losing for beings.
This is reflected in the first biennial report on climate change risks to the financial system, prepared by the Bank of Spain and the National Securities Market Commission (CNMV) and General Directorate Insurance and the Macroprudential Authority Pension Funds Financial Stability Council (uncle) of which they are a part together with Ministry of Economy. Number of mortgaged houses in areas with the highest flood risk actually higherBecause the data is not included in the report Basque Country and NavarraFor the rest of the region, this has only been possible. Geolocate 60% of homes Thanks to the cadastral reference.
The auditors based their calculations on the national mapping system for flood zones prepared by the Ministry of Ecological Transition. So they used both river areas Areas that may be flooded, such as those located on the coast. This map divides them into four categories: “high probability” of suffering these disasters (every 10 years on average), “often” (50 years), from “moderate to occasional” probability (100 years) and “low or exceptional” probability (500 years).
2.7% of total
The study, the main results of which were presented by this newspaper on Sunday, showed that, as of June 2022, it was able to determine the geographical location of approximately three million homes, 1.3% (about 39,000) They are found in areas that flood on average once every 10 years. Those who suffer from this condition every 50 years have at least other diseases. 42,000 homes (1.4%)increased the total number of homes in the highest risk areas to more than 100 81,000, 2.7% of total. Other regions with a probability of once every 100 to 500 years 150,000 (5% of total geographically located)however, the report highlights that “the immediate risks are much smaller” for the bank in this case, given the very low frequency of incidents in these areas.
The document also states that homes in flood-prone areas appraised value This is equivalent to 6.6% of the total appraisal value of three million people whose geographical location is determined. It is therefore underweighted by the total number of homes analyzed (7.7% of three million), which makes them cheap real estate. Similarly, the study finds that mortgages on homes in flood-prone areas are no higher than in the rest of the world. ‘credit for value’ (the weight of the loan on the value of the property). In this parameter, They do not pose a big risk For banks more than any other: The more the loan weighs on the value of the property used as collateral, the greater the likelihood that the bank will incur a loss if the asset in question deteriorates or loses value.
Expertise and insurance companies
“This initial analysis shows that exposure ratio of bank mortgage portfolio to flood risks annoyed and that there is no evidence that credit valuations are higher in areas with higher flood risk. But it is suitable to follow Frequency of events and extent of impacts if climate change is not prevented Flood zones can be expanded in the future,” the report warns.
The Bank of Spain therefore foresees that it may examine “to what extent this is happening” in the future. real estate valuations already includes flood risks or vice versa risk of sudden adjustment Determining the appraisal values in case such events occur.” Similarly, “the company’s insurers If this flood happened I would play, absorb some of the potential damagemay not result in a loss in the value of the warranties”.