The rise in rates is primed with medium and low incomes and already leaves 350,000 households in a critical financial situation

The rise in interest rates is hitting hard families that have loans and mortgages with variable interest, and especially those with lower incomes.

The Bank of Spain estimates that families that allocate more than 40% of their income to the payment of financial obligations have skyrocketed in recent months, and since the beginning of the monetary tightening process there are already

..

“In the case of households, it is estimated that the proportion of families with debt that would have a high net financial burden would increase in Spain by almost 4 percentage points.

This effect would be more intense in indebted households located

», explained this week the head of the agency, Pablo Hernández de Cos.

At the end of last June, however, the governor himself pointed out, at a conference organized by the Association of Economic Information Journalists (APIE) in Santander, that the proportion of families with a high net financial burden had increased by almost two percentage points.

That figure represented around 175,000 families, a

.

What has remained constant is the fact that the main affected are households that are "between the 20th and 40th percentiles", that is,

, and also that Hernández de Cos has repeatedly shown his concern for this fact.

For a long period of time, interest rates remained exceptionally low, which encouraged many families to take out, for example,

.

This process was also encouraged by the financial entities, and the result is that now, with the sharp rise in the price of money that the ECB is applying to try to control the galloping inflation, those same families are drowning with the credits subscribed.

But they are not the only ones affected.

The Bank of Spain also points out its concern about the situation of companies and public accounts.

"The tightening of financing conditions

", explains Hernández de Cos in the first case, and adds: "In business bank financing, loans with short-term maturities or interest rates variable, so the pass-through of the rise in market interest rates to the average cost of debt is relatively quick.

In the second, the agency points out that since 2007 there has been a growth in public debt, which "also entails a greater

to movements in interest rates."

"However, the fall in these observed in recent years and the lengthening of the average term of the debt, which is currently above eight years, limits the impact in the short term," he adds.

According to their estimates, "the financial burden of public debt would increase in Spain from 2.2% of GDP at the end of 2021 to 2.6% in 2024."

Recession in 2023?

This tightening is combined with a complex situation in terms of growth, so much so that the president of BBVA, Carlos Torres, pointed out yesterday that Spain will suffer a

.

Torres, who chairs the entity with one of the most powerful study services in the country, stressed that "the environment is very challenging, the most challenging in recent decades due to uncertainties."

And he explained that when the economy was coming out of the pandemic, "quite strongly" and with some inflation that responded to the reopening of the markets, "the invasion of Ukraine came."

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