The year 2013 in Europe promises to be challenging economically. The sovereign debt crisis in Europe is directly affecting the credit markets.
Indeed, just as we thought we had made significant progress in November 2011 in solving the Greek crisis, public deficits are already reminding us of their presence. Now it is Spain that is causing concern: the Spanish economy contracted by 0.3% in the first three months of the year compared to the fourth quarter of 2011. Spain has officially fallen back into recession. The Spanish government acknowledged on Friday that it is experiencing “perhaps one of the toughest moments for its economy” but remained optimistic about the future.
The financial rating agency Standard and Poor’s downgraded the ratings of nine Spanish banks on Monday, including Santander and BBVA, as well as that of the savings bank confederation (Ceca), after downgrading Spain’s sovereign rating by two notches from A to BBB+ on Thursday. Unemployment in Spain continues to break records, now exceeding 24% of the population.
European governments have decided to tackle the problems of public deficits, and it is no surprise that austerity plans have been adopted across Europe. In Belgium, the 2012 budget planned to save 15 billion euros. Unfortunately, this financial crisis is hitting the real economy hard. The consumer confidence index is at a low, and the prevailing pessimism does not encourage households to spend. Similarly, SMEs are finding it increasingly difficult to secure financing.
Impacts on credit
The effects are clear: Both credit applications (-19.39%) and loans granted (-24.10%) have decreased in the first three months of the year. The mortgage market contracted in the first quarter of 2012 compared to the previous quarter, following the elimination of certain tax incentives. The UPC also notes that the number of renovation loans (around 12,600) has fallen by nearly half, while the number of construction loans has dropped by a third (around 5,500). The amount of loans granted has also decreased (-10.66%).
Credit brokers could be a solution for many borrowers. Indeed, credit brokers do not adhere to the banking logic, and granting credit is their sole business, unlike banks. More and more people are turning to independent brokers who are less strict in granting loans.
At Crédit Populaire Européen, we have a specialist in mortgage credit (Mrs. Jacqueline Legrand – 30 years of experience) whose professionalism and availability have already benefited many of our clients. It is the tailor-made individual approach that is the recognized hallmark of Crédit Populaire Européen.
