Thursday, December 7

Banks lower consumer loans to a minimum of 11 years

Borrowers of consumer loans in Spain during 2021 will have benefited from the lowest average interest payment in the last ten years.

Consumer credit, classified according to the definition of the Bank of Spain (BdE) as a personal loan for an amount greater than 200 euros and less than 75,000 euros, which is granted so that a consumer meets his personal needs, has carried an annual rate Average equivalent (APR) of 7.631 percent during the first ten months of the year.

The data published by the BdE in his web page show that the weighted average rate of this type of credit has followed a downward trend this year, driven as a measure of reactivation of the economy during the worst months of the pandemic in 2020.

And it is that in the past year, despite having marked a historical minimum of the APR on consumer credit, the 6.98 percent registered in November, the average stood at 7.744 percent.

To find a lower average APR throughout the year than the one marked during the first ten months of 2021, we must go back to 2010, when the data collected by the Bank of Spain show an interest payment weighted at 7.47 percent.

Estimates point to a total concession slightly higher than 2020

Despite the low interest rates, consumer credit is not at its best.

In April, a reduction of up to 8 percent was observed compared to the 2,523 million euros of concessions made in March, a figure that was corrected during a few months from May to July when loans rose again to the average of 2,500 million

In August, however, this figure fell again due to the generalized halt in activity, marking a minimum for the year at 1,820 million euros that rose to 2,300 and 2,500 million in September and October.

The total money that the bank has lent in the matter of consumer loans stands, therefore, at 23,066 million euros at the end of the first ten months of the year. Consequently, it is expected that the year will close exceeding the 26.6 billion euros granted in 2020, but it is still far from the levels reached in the years prior to the pandemic.

In 2019, for example, a total of 36,237 million euros were granted in personal consumer loans, a historical maximum in the data collected in the report of the Bank of Spain, which lasts until 2010.

The bank, of course, already far exceeds the concession levels registered between 2011 and 2015, when the total of consumer loans remained in a range between 12,000 and 19,000 million euros, depending on the year.

The Bank of Spain remains alert

Despite the relatively low data on demand for consumer loans, the Bank of Spain does not remove its supervisory eye, placed on the entities that grant these loans, and reported Tuesday of the development of “a transversal supervisory action, aimed at a representative sample of the most active entities in the commercialization of consumer credit for the purchase of automobiles”.

The objective of this initiative, explains the public entity, was to examine the usual practices, procedures and internal controls in relation to this activity, as well as to assess the degree of compliance with the obligations contained in the law on consumer credit contracts, among other standards.

As a result of the action, the Bank of Spain claims to have evidenced “the existence of weaknesses in the fulfillment of certain obligations regarding transparency and customer protection in relation to financing for the acquisition of automobiles.”

For this reason, the institution claims to have sent letters to the 14 analyzed entities, to which it has made various requirements and recommendations in order to remedy the weaknesses detected.