June was again a devastating month for household finances. Despite the end of confinement and the gradual return of economic activity, the number of requests for a moratorium on credit payments continued to grow at a rate of 32%.

This is stated in the records of the Bank of Spain. In total, until the 30th of this month, Spanish households had registered more than 1.3 million requests to defer the letters of their mortgage or consumer debt, such as the purchase of a mobile phone or a car . The figure represents an increase of 322,000 requests compared to what the financial regulator had registered at the end of May.

The data shows the financial suffocation in which many families are still immersed. 70% of applicants for deferrals are salaried workers who have been affected by the crisis, either by joining an ERTE - which many have not received -, directly losing their jobs or suffering a notable cut in their wages.

The rest of the moratorium applicants are self-employed, and here two groups especially affected by the crisis stand out: merchants and hoteliers. Four out of 10 of these small entrepreneurs with problems facing their loans belong to one of these sectors, which have been closed for months and are now partially reopening and with higher costs linked to health security.

The new moratoriums registered in June are grouped for the most part in the initiative launched voluntarily by the banks as an alternative to the moratorium approved by the Council of Ministers at the beginning of the state of alarm. The difference between one and the other is that the government deferral affects the entire bill (principal plus interest) but it is limited to three months, while the banks' proposal was valid for up to 12 months and clients had to continue paying only interest during this period. Furthermore, the income access criteria are more flexible than in the moratorium established by Royal Decree-Law.

The requests for postponement recorded by the financial regulator are new, that is, they are added to those of families that used this mechanism in a massive way during the months of April and May. This has caused the total credit affected by these suspensions to exceed 41,000 million euros , just over 6% of the total system.

Despite the increase in moratoriums, the official default rate remains stable for now, since financial institutions are not required to account for these loans as defaulters. The bank default rate remained at 4.7% in April, although the entities themselves and the Bank of Spain expect that sooner or later it will increase considerably as a result of the drop in GDP.

The future of ICO lines granted by banks with a guarantee of up to 80% by the State will also play a key role here. For now, the entities have granted 85,000 million , the majority to self-employed workers with a 12-month grace period in payment. Therefore, these companies will have to begin to return the loan in the next spring if they have managed to survive the crisis.

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