Spain's PM pledges to extend €300 monthly mortgage relief to more families

Spanish Prime Minister Pedro Sánchez has pledged to extend access to Spain's mortgage relief scheme to include households with annual incomes of up to €37,800 gross, and promised that it would be a priority of the government if it is re-elected in the July 23rd general election.

"It will be one of the first measures we take," Sánchez said on July 5th at an event with the vice president of Economic Affairs, Nadia Calviño.

"It is important that the government contributes to that relief for families, which is impacting as a result of monetary policy that is in the hands of the European Central Bank, not in the hands of the government in any European country," he added.

The extension is part of a raft of government measures to try and ease the burden on Spaniards struggling with mortgage payments.

In late June, Calviño announced after meeting with Banco de España bosses as well as Spanish consumer associations of her intention to speed up a three-year extension of mortgage terms.

Spain's mortgage relief measures were first introduced in November 2022  with the aim of helping one million families, but the provisional data from January to May shows only 33,000 applications so far.

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At the event, Calviño also outlined further measures such as freezing mortgage payments during the first year for some families. The measures, in addition to increasing the income threshold, are aimed at helping households with average or below average incomes and particularly vulnerable to interest rate rises amid the ongoing cost of living crisis.

The relief scheme, the threshold of which is currently set at €29,400, will be extended to those households with annual incomes of €37,800 that can demonstrate that over 30 percent of their monthly income goes on mortgage payments.

With the new upper threshold for the scheme, calculations based on a mortgage of €150,000 contracted in 2018, monthly household savings are projected to be €300 per month or €3,600 per year.

So far, the number of households that have applied for the mortgage relief scheme has been underwhelming, with the numbers of applicants in the tens of thousands rather than the million households that Calviño pledged to help when it was first launched.

This is partly explained by the fact that the effects of rises in the Euribor rate have yet to be entirely passed onto Spanish mortgage holders, so it is anticipated that more households will require relief in the short to medium-term future as the effect is felt more strongly.

This extension of the relief package will form part of PSOE's electoral program heading into the July 23rd election. Calviño reiterated Sánchez's pledge to lift the threshold on mortgage help if the government is re-elected.

"This has to be one of the first measures in the next legislature," she said, and highlighted the fact that although Spain's overall economic situation has been "better than expected," interest rates have risen more than anticipated, which is putting pressure on households.