The start of interest rate hikes in the euro zone in July and the prospect of new increases have already made credit more expensive in all areas of the economy, especially in business.
The recently updated data from the Bank of Spain show that the cost of debt for home purchases, consumer loans and business activity are at their highest in eight years, with special mention for the third category, where the rise is resulting more abrupt
The cost of debt for home purchases stood at 2.51% at the end of October, according to the update of the Bank of Spain's Statistical Bulletin. It is 30 tenths higher than the previous month and the highest level since 2.56% in 2014. In 2011, in the midst of the financial crisis, the percentage stood at 3.58%.
Mortgages come from being at exceptionally low levels in the years of the pandemic and their cost had been below 1.5% until this year. In the renegotiations of loans for the purchase of housing, a rebound was also seen in October, reaching 2.39%, also the highest level since 2014.
Consumer loans are also getting more difficult, with an average cost in October of 7.29%, compared to 7.01% the previous month. They have been above 7% since August and current levels are the highest since the 7.56% reached in 2015. This type of loan, which includes everything from the purchase of household appliances to vehicles, reached its lowest point in November 2021, falling to 5.69%.
Despite these increases, bank delinquency remains at the lowest rates since 2008, and has only fallen despite inflation and threats of economic recession. In September it stood at 3.79%, 56 basis points less than in the same month of 2021, according to data from the Bank of Spain. EY calculates that in 2023 non-performing loans will not exceed 4.4%.
Of all the credit indicators, the one with the worst relative evolution is the one dedicated to companies. In October, also according to the Bank of Spain, it stood at 2.82%, when in August it was at 1.6%. The current level is the highest since 2013, when the cost was 3.34%.
Loans to companies are generally at levels similar to those for home purchases, with moments of lower cost and others, such as the current one, with a contrary trend.
In Spain, companies have been able to cushion credit difficulties with ICO lines and the forecast is that starting next year they will be able to access part of the 84,000 million euros of European funds in lines of credit.
Households and companies continued to borrow in October at a level similar to that of previous months. For the purchase of housing, loans were signed for 4,822 million euros, compared to 11,313 million for consumption and 28,193 million for business uses.
