Banks urge companies feeling the pinch to negotiate now as recession fears loom
Portugal’s banks are urging their 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” because of the new measures created by the government to relieve the impact of rising interest rates on home loans.
The 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.
A case in point is Novobanco which “began contacting its clients this week to see if they were suffering from a “significant worsening in their situation regarding their mortgage service rate under new rules”, Mark Bourke told the online news source ECO.
Last week Banco CTT sent an e-mail to its clients 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 (CGD), which had already been negotiating with 500 families before the government’s decree law, said that it had “not noticed a significant increase in clients wanting to renegotiate the terms of their mortgage repayments” while BCP says clients should send “all the necessary documentation” via online home-banking to a division on the website that it has had specially created 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.