he Bank of Spain You expect that The future inheritance situation of families and businesses will be “relatively favourable” given the progress of economic activity Market expectations of lower interest rates. This would translate, for example, to a Cheap mortgages, which can be observed from next month.
However, the Pablo Hernández de Cos-led body warned in its report on the financial situation of households and businesses that the development of these sectors will be determined by the overall financial context.
Consequently, the Bank of Spain warned that if some negative scenarios regarding economic growth come true, there could be a deterioration in the financial situation of households and companies.
Likewise, the institution warned that if monetary policy interest rates were lowered than what the market currently expects, there would be less relief from the financial pressures this would impose on debtor agents.
According to the report published today, Wednesday, in the second half of 2023, the financial situation of families and companies improved in terms of increased income, decreased debt, and increased asset value.
2 The fundamental determinants of this development were: on the one hand, economic growth continued to generate employment and allowed wages and business income to rise; On the other hand, the European Central Bank's monetary policy tightening, under which interest rates continued to rise until September, increased the cost of new financing and weakened credit flows.
The rate increase affects families and businesses in a “moderate” way.
Thus, it is estimated that the cumulative increase in interest rates during this cycle would have slightly raised the proportion of vulnerable households indebted, thanks to the increase in income, which also reflects a limited materialization of risk, as indicators of the quality of bank loans indicate.
In the case of companies, the positive development of corporate profits would also have limited the increase in the percentage of companies experiencing high financial stress in 2023, which would be very moderate, and for 2024 this percentage would show only a small variation.
Overall, the agency estimates that highly indebted households and businesses will increasingly begin to experience some reduction in the costs associated with debt servicing.
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