Left Bloc warns of ‘enormous risk’ of ‘hoping banks will come up with solution for mortgage increases’

Left Bloc warns of ‘enormous risk’ of ‘hoping banks will come up with solution for mortgage increases’

Catarina Martins speaks on day marked by political ‘groundhog’ announcements

On yet another day where the government re-releases policies it has announced previously, as if somehow they are new, Bloco de Esquerda has warned of the “enormous risks” in essentially ‘hoping everything will work out’ for families facing staggering mortgage increases.

Prime minister António Costa gave another of his upbeat speeches this morning, on how he expected banks to ‘negotiate’ around any problems clients may experience.

The effect of rising interest rates on home-loan repayments should not be allowed to become a drama, he said.

Which is all very commendable, but also frighteningly open-ended. What if banks’ ideas on ‘negotiation’ don’t gel with their clients’ abilities to respond? Or what if banks do not show the ‘good will’ Mr Costa is expecting from them?

Catarina Martins believes there should be a legal obligation put in place, to oblige banks to renegotiate all their home-loan contracts. A kind of ‘guarantee’ imposed, so that families know they are protected.

She told journalists today, “waiting to see if banks come up with a solution is an enormous risk for the country. It is abandoning families already in such a difficult situation (…) Unless people have forgotten, banks have never cared much about creating real-estate crises. What we have learnt from the past is that when there is a housing crisis, families lose their homes – and banks wait for taxpayers to bail them out…”

To ensure none of this happens again,” in the same way as spreads were raised when interest rates fell, banks should now be forced to lower spreads and renegotiate other conditions, such as deadlines for example”, to ensure that no-one loses their home…

To be fair, the prime minister did say: “We will approve a law that favours negotiation and eliminates costs associated with this negotiation”. What BE appears to be saying is the law has to OBLIGE negotiation, not simply favour it.

Otherwise, the day has been a strange one of re-publicising the public sector salary increases, which remain the same as they were when they were first announced – and still fail to keep up in any reasonable way with the rising cost of living.

With the PS executive’s plan for next year’s spending due to be debated in parliament on Thursday and Friday, the government seems intent on winning some ‘good press’ ahead of what is likely to be a political bloodbath.

The beer industry is already desperately trying to win concessions before the budget is set in stone; gas supplier companies too are saying they will be forced into bankruptcy if the government doesn’t lift the cap on prices they can charge; teachers are warning of new strike action; public sector workers have set November 18 for a day of national strike – and pundits and commentators are warning there will be a “social calamity” unless a new raft of measures to help the most vulnerable is not introduced quickly: if not now, measures must be in place by the start of the New Year, warned television commentator Luís Marques Mendes last night.

How high are mortgages are expected to rise?

Luís Marques Mendes presented a graph last night (see image above) on SIC’s Jornal de Noite to show projected mortgage increases over the coming months, compiled by DECO proteste with the input of one of the national banks. 

He described the picture as “frightening”: an average €120,000 loan over 30 years is set to rise by over 66% in comparison with what was paid in January this year by July next. 

Clients, in other words, who paid out around €400 a month in January 2022, are likely to be faced with repayments of over €640 a month in July 2023.

Already this month, mortgage repayments in the €120,000 home-loan ballpark have increased by 34%, he said. 

“This is really frightening (…) These increases are brutal. Even if right now we have a situation of ‘full employment’ – meaning there is a much more positive outlook than there was during the times of the troika (in them aftermath of the 2008 financial crisis), the measures that the government have announced so far are clearly insufficient (…) There has to be more concrete support for people repaying mortgages”, he said – recalling that the long-term rentals sector has received ‘protection’ by a freeze on rents, with landlords receiving financial compensation through their IRS; it is only fair to ensure the mortgage sector gets similar treatment.

Today, these are all ‘issues’ being bandied about in the press. By Thursday, in parliament, they will become real bones of contention as opposition parties will push for a much more ambitious State Budget that provides more assurances for people and families currently assailed from all sides by the rising cost of living.

natasha.donn@portugalresident.com