The collapse in the granting of new mortgage credit is yet another stick in the wheel of the remuneration of deposits. During the first five months of the year, the import of new operations to finance the purchase of housing fell by 22% compared to the same period in 2022. Given this panorama of slowdown in the rate of granting credit to banks, it is not urgent attract money to lend and hence another reason to postpone a significant improvement in the remuneration of deposits.
Financial sources adopt La Información that this is another of the reasons behind the decision to pay low interest for fixed-term deposits in a general way. In this sense, they recall the close relationship between assets and liabilities, so that at a time when credits (assets) are slowing down, the collection of balances is also slowing down, and this despite the fact that European banks have returned almost 500,000 million of euros through the TLTROs to the European Central Bank.
And this drop in credit is related to the current moment. The rise in the Euribor, the index to which most variable-rate mortgages are referenced, which has already exceeded 4% in the monthly rate at the end of June, is expelling a part of potential mortgagees. To this is added the economic uncertainty due to the rise in interest rates and the increase in inflation that reduces the purchasing power of families and that also postpones borrowing decisions. These circumstances are reflected in the figures of the Bank of Spain. In May, new credit began a 19% decrease compared to twelve months earlier, going from 5,857 million euros to 4,736 million euros. In the accumulated of the year, the difference is almost 6,000 million euros.
But there are other reasons to put off improving pay. The first is the excessive liquidity that exists in the market. These same sources indicated that despite the window open at the end of June, they still have more funds from the ECB that should be returned in the first of 2024. They also explain that with everything, the liquidity ratio, LCR, will remain at high levels above the 100% required by the regulator.
Another argument is the lack of competition between the big banks. Although it is true that little by little offers are beginning to proliferate, especially through digital banking and neobanks, the reference entities prefer to stabilize on the margin and choose to offer remunerated accounts, limited in time and amount. However, these same sources point out that in the event that there is a large movement in this direction, it could generate a chain reaction.
bank defense
The bank, for its part, defends itself against the accusations of lack of remuneration of deposits arguing that it is not true that the liability is not being remunerated and remember that there are offers especially in the field of remunerated accounts, which come to offer a return from 2.50% to one year, with the additional advantage of having the money available on hand.
In this sense, according to the Bank of Spain, interest on deposits from both families and companies improved slightly in May. The weighted average rate for households stood at 1.65% in May, 25 basis points more than in April, when it closed at 1.40%, representing an improvement of 18%. Regarding one-year deposits, the average remuneration rose to 1.64%, from 1.33% the previous month, although these returns are far from what is paid in Europe and the ease of deposit that is stood at 3.50% in June.
Regarding the profitability of deposits to companies, the gap that exists with families remains and in May the weighted average rate stood at 2.80%, 26 basis points compared to April of the same year. One year, the rate stood at 2.84%. Sources from the sector have reported to La Información banks that they did transfer negative rates to company deposits, but not to families.
