Banks urge struggling clients to negotiate now

Banks urge struggling clients to negotiate now

Banks are reaching out to individual customers as recession fears loom

Portugal’s banks are urging clients who may already be in difficulties or anticipate cashflow or loan repayment problem in 2023 to get in contact now.

In a bid to avoid a flurry of loan and mortgage defaults next year as fears of a recession loom and interest rates rise across the Euro Zone to tackle inflation running at around 10%, banks are reaching out to individual customers which are “feeling the pinch” or fear they may be “up against the wall”.

Extraordinary measures introduced include mortgage extensions; setting grace periods for capital repayments (temporary interest-only mortgages) or stays on interest rate repayments; deferment of part of the capital for a repayment at a later date; and a reduction in the interest rate applicable during and for a set period of time.

Novobanco, for example, began contacting its clients to see if they were suffering from a “significant worsening in their situation regarding their mortgage service rate under new rules”, Mark Bourke told online news source ECO.

Banco CTT sent an email to its clients last week asking for financial information, namely IRS declarations and proofs of monthly incomes should they need to update their mortgage interest payment rates.

Caixa Geral de Depósitos said that it had “not noticed a significant increase in clients wanting to renegotiate the terms of their mortgage repayments”.

BCP says clients should send “all the necessary documentation” via online home-banking to a division on the website that it has created specifically for such situations.

BPI told the news site that it will shortly have a multichannel solution for its customers to make communication of any problems paying mortgage interest or other loans easier.

Source: Essential Business