José Luis M. Campuzano (Spanish Banking Association) | The Bank of Spain published an interesting analysis of household financial flows and balances at the end of 2018. Four conclusions can be drawn:
- Families have continued to reduce bank debt to 96% of gross disposable income (gross disposable household income – GDHI) and 59% of GDP.
- Households have received new net bank financing, amounting to 0.2% of GDHI.
- The savings rate is at historic lows at 4.9% of GDHI.
- Household gross financial wealth fell 1.6% to 293% of GDHI, explained by the fall in the value of financial assets.
Household debt levels are now similar to the European average, with a greater tendency in Spain house ownership. In a context of economic improvement and favourable financing conditions, it is reasonable to expect that the current residential dynamics will be reflected in a fluid demand for mortgage financing.
Facing the decline in savings levels, households continued to increase their portfolio of financial assets last year to 2.3% of GDHI. The major part of these investments are bank deposits (4.4% of GDHI), with a sharp increase over the previous year. Deposits are the principal component in household financial risk, over 113% of GDHI.
The fall in gross household financial wealth last year was greater than the fall in their liabilities, especially bank debt, which led to the first fall in net financial wealth in eight years. The levels remain above those seen during the crisis.
