The Government of Spain eases mortgage burden on vulnerable families

Moncloa Palace, Madrid

The Council of Ministers has adopted a package of measures aimed at families most affected by the rise in the Euribor - the benchmark interest rate for variable rate mortgages - caused by the war in Ukraine. More than one million households will be able to benefit from this protection, approximately one third of those with variable rate mortgages, according to the First Vice-President of the Government of Spain and Minister for the Economy and Digital Transformation, Nadia Calviño.

The first vice-president stressed that the Euribor is below historical levels, forecasts point to its stabilisation and there is no "macroeconomic risk" because the situation is very different from that of the 2007 crisis. Thanks to the support of the public sector and the reduction of credit, the financial position of households is "healthier, with more savings and less debt than at other times in our history, and all this reinforces the resilience, the strength of the Spanish economy in this context".

Even so, said Calviño, some families, particularly those that are vulnerable or at risk of vulnerability, are feeling the effects of the rise in Euribor, which is why the Government has approved this range of measures that will provide citizens with a "menu of options" to cushion the mortgage burden and have more "certainty" about their level of spending in the medium and long term.

Relief measures for those with mortgages

The initiatives adopted today act in three ways, as explained by the first vice-president: they improve the treatment of vulnerable families; they create a new action framework for middle-class households at risk of vulnerability; and they establish general measures applicable to all mortgages.

Most vulnerable debtors

Firstly, the current Code of Good Practice for vulnerable people with mortgages, those families with incomes under 25,200 euros per year and a 50% increase in the effort required, with homes of up to 300,000 euros, is reinforced. Specifically, the interest rate applicable during the five-year grace period for the payment of the mortgage's principal is reduced from Euribor plus 0.25% to Euribor minus 0.10%.

In addition, it introduces the possibility of families requesting debt restructuring more than once; it doubles the deadline for requesting dation in payment of the habitual residence to 24 months, and extends the deadline for requesting social rent in the home itself from the financial institution from 6 to 12 months, for a maximum amount of 3% of its value, by people in a situation of vulnerability who are subject to being evicted from their habitual residence.

As an example of the impact of these measures, Calviño detailed that a family with a standard mortgage of 120,000 euros and a monthly payment - after the revision of interest rates - of 524 euros will see their payment during the five-year grace period reduced by more than 50%, to 246 euros.

In addition, the scope of the Code is extended to cover more than 300,000 families. Thus, vulnerable households that have not experienced a 50% increase in their mortgage burden will also be eligible under the Code, in this case with a two-year grace period on the principal, a lower interest rate during this period and the possibility of extending the mortgage term by up to seven years.

The irst Vice-President and Minister for the Economy and Digital Transformation, Nadia Calviño, during her speech at the press conference after the Council of Ministers | Pool Moncloa/Borja Puig de la Bellacasa

Households with an income under 29,400 euros

Protection is extended to middle-class families at risk of vulnerability as a result of rapidly increasing mortgage burdens: the new Code of Good Practice will apply to households with an income of less than 3.5 times the Public Income Index (IPREM) - around 29,400 euros per year - whose mortgage payment is more than 30% of their income and who have experienced at least a 20% increase in their mortgage burden.

For these cases, financial institutions should offer the possibility of freezing the payment for 12 months, reducing the interest rate applicable to the deferred principal and extending the loan term up to seven years.

According to Calviño, this new catalogue of measures will allow up to 700,000 families to gradually adapt to the new interest rate scenario.

Additional measures

The approved initiatives include further reducing all costs to convert variable rate mortgages to fixed rate and eliminating early repayment and conversion fees during 2023. In addition, the Bank of Spain will prepare a guide for people with mortgages in difficulty, and the monitoring of the application of both codes will be reinforced.

Financial customer protection

Strengthening the protection of citizens in the financial sphere is also the objective of the draft Law on the Financial Customer Ombudsman's Authority which the Council of Ministers has sent to Parliament. This new administrative authority - financed by the financial institutions - will be responsible for resolving disputes between financial institutions and customers when the latter are not satisfied with the response given by the institutions' own complaints and claims offices.

The first vice-president pointed out that the complaints procedure will be free of charge and with personalised attention, and that a general maximum period of 90 days will be established for the resolution of the complaint, except in exceptional circumstances. The text extends the scope of customer protection in the area of crypto-assets or fintech services.

Support for Ukraine and war-affected businesses

The Executive adopted two other agreements related to the war in Ukraine.

On one hand, it approved the provisioning of guarantees for financial support to Ukraine, which is necessary for the maintenance of the Ukrainian economy and administration.

On the other hand, it has extended the deadline of the guarantee line to provide liquidity to companies and self-employed people affected by the war in Ukraine until 1 December 2023.

Common basic framework for environmental officers and forest firefighters

The Third Vice-President and Minister for Ecological Transition and Demographic Challenge, Teresa Ribera, during her speech at the press conference after the Council of Ministers | Pool Moncloa/Borja Puig de la Bellacasa

The Council of Ministers has approved two draft laws to establish the functions and working conditions of forestry and environmental officers and forest firefighters throughout the country.

The Third Vice-President of the Government of Spain and Minister for Ecological Transition and Demographic Challenge, Teresa Ribera, explained that the regulations respond to the historical demand of these professionals to have a common basic framework that ends the differences depending on their affiliation to one administration or another.

Forestry and environmental agents are affected by a great heterogeneity of names and functions depending on whether they relate to the State or the regions. For their part, the different regional models for managing firefighting services have led to a high level of temporary and seasonal contracts and disparity of salaries for forest firefighters.

Ribera affirmed that the Government wants to settle an outstanding debt with these two groups, "key to the protection of the territory, ecosystems and biodiversity" and who, moreover, "risk their lives for the safety of all".

Forestry and environmental officers

In Spain, currently around 6,000 people work as forestry and environmental agents. Four hundred of them are Environmental Agents in the General State Administration and the rest are distributed among different bodies in the regional administrations.

"They are the first link in a whole system dedicated to conserving nature and monitoring environmental discipline in a country that is extraordinarily rich in terms of biodiversity and forest wealth", stressed Teresa Ribera, who pointed out that they also have the status of public authority, without prejudice to their obligation to collaborate with the State Law Enforcement Forces and Agencies, which exercise special administrative police and judicial police functions.

Their functions include basic assistance and collaboration in emergencies and civil protection in the natural environment; those derived from the custody and surveillance of legal assets of a forestry and environmental nature and technical environmental and forestry support, public domain, landscape and planning, and monitoring or inventory of habitats.

Forest firefighters

The third vice-president of the Government stressed that the new regulation of forest firefighters will allow for greater professionalism and safety at work and will offer ongoing training, which will result in greater efficiency: "We are aware of the very significant increase in the number of fires throughout the national territory across the year, no longer just concentrated in a particular season and in certain areas, and of the worsening of the characteristics of these fires".

The draft bill considers forest firefighting to be a service of essential nature and social interest throughout the territory, regardless of the legal nature of the labour law under which each administration employs personnel. It also determines the functions of forest firefighters, who must work in close collaboration with those responsible for civil protection for the prevention, surveillance and detection of fires, their extinction, and the maintenance of the different infrastructures, equipment and installations.

The Government Spokesperson, Isabel Rodríguez, the First Vice-President, Nadia Calviño, and the Third Vice-President, Teresa Ribera, during the press conference after the Council of Ministers | Pool Moncloa/Borja Puig de la Bellacasa

There will be a basic professional classification system throughout the territory, service and rest periods shall be established and the conditions relating to the prevention of occupational hazards shall be regulated, taking into account the special characteristics of danger, physical effort, toxicity, morbidity and hardship. These aspects will be considered in the negotiation of remuneration.

Other aspects contained in the regulation are the maintenance of staff in the event of business succession, the possibility of a second activity and the need to promote specific sex equality plans.

Finally, Ribera demonstrated her commitment to continuous formal, theoretical, physical and practical training for forest firefighters. The Committee on Forest Fire Fighting will establish the common standards of core competencies and training, which will then be ratified by the Sectoral Conference.

Strengthening the agri-food industry

Among the measures adopted by the Council of Ministers to promote the transformation of the productive fabric, the Government Spokesperson and Minister for Territorial Policy, Isabel Rodríguez, has highlighted the roll out of the Agri-Food PERTE.

The agreement will finance actions to strengthen the agri-food industry, worth just over 200 million euros in grants and up to a further 200 million euros through loans.

As part of this Strategic Plan, Isabel Rodríguez referred to the start-up of the Fundación Ciudad del Envase y del Embalaje, a technology centre that will be located in La Rioja.

Territorial cohesion and refugee aid

The spokesperson reiterated the Government's commitment to territorial cohesion, a cornerstone of the legislature, which in today's meeting took the form of a new subsidy to alleviate the damage caused by the eruption of La Palma, with various subsidies to regional governments for employment policy projects of particularly vulnerable people, and the contract to construct the new Social Security Data Processing Centre in Soria.

In addition, the Council of Ministers has earmarked 2.6 million euros to public universities that are hosting Ukrainian students and researchers displaced from their country by the Russian invasion.

The Government Spokesperson and Minister for Territorial Policy, Isabel Rodríguez, during her speech at the press conference after the Council of Ministers | Pool Moncloa/Borja Puig de la Bellacasa

Combating sex-based violence

On the occasion of the International Day for the Elimination of Violence against Women, the Government has reiterated its commitment to guarantee the protection and rights of victims in an Institutional Declaration.

"The fight against male violence is at the heart of our democracy, and this Executive wants to send a message of recognition and tribute to all women, girls and boys who are also victims of this violence, and to their families", said Isabel Rodríguez.

Non official translation