Indeed, while we thought we had made significant progress in November 2011 in resolving the Greek crisis, public deficits are already reminding us of their presence. It is now 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 therefore 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 lowering Spain’s sovereign rating by two notches from A to BBB+ on Thursday. Unemployment in Spain continues to break records, currently exceeding 24% of the population.
European governments have decided to tackle the issues of public deficits, and it has not gone unnoticed that austerity plans have been adopted across Europe. In Belgium, the 2012 budget planned to achieve 15 billion euros in savings. Unfortunately, this financial crisis is hitting the real economy hard. Consumer confidence is low, and the prevailing pessimism does not encourage households to spend. Similarly, SMEs are experiencing increasing difficulties in securing financing.
Impacts on Credit
The effects are evident: Both credit applications (-19.39%) and credits granted (-24.10%) have declined during the first three months of the year. The mortgage market contracted in the first quarter of 2012 compared to the previous quarter, following the removal of certain tax incentives. The UPC also notes that the number of renovation loans (approximately 12,600) has dropped by nearly half, while the number of construction loans has decreased by a third (approximately 5,500). The amount of credits granted is also down (-10.66%).
Credit brokers could be a solution for many borrowers. Indeed, credit brokers do not follow the banking logic and granting credit is their sole business, unlike banks. More and more people will turn to independent brokers who are less strict in granting credits.
At Crédit Populaire Européen, we have a mortgage credit specialist (Ms. 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 trademark of Crédit Populaire Européen.