World
Bank of Portugal sees risk of falling house prices | Bank of Portugal
After four months of war in Ukraine and at a time when inflation reaches its highest level in decades, Banco de Portugal (BdP) is raising the tone of its financial stability risk warnings. Among the main risks now is the possibility of a “significant correction in market prices for residential real estate”, a scenario that, if confirmed, could have a direct impact on banks’ balance sheets.
in the very last Financial stability reportdated June 2022 and published this Friday, BdP recognizes among the main vulnerabilities and risks to financial stability “the risk of lower prices in the residential real estate market as a result of changes in financing conditions.”
This risk is indicated when interest rates are rising again, after several years at historically low and even negative levels, making credit more expensive. At the same time by this time House prices continue to rise at a rapid pace, as a result of an increase in demand for housing, especially from non-residents, and a continuing shortage of supply. In the first quarter of 2022, according to the latest data from the National Statistical Institute (INE), house prices in Portugal rose by 12.9% compared to the same period last year.
In this context, BdP believes that “in recent years, domestic bank credit has not been the main driver of house price increases”, but this is a scenario that could change and needs to be monitored. “In the context of the recent higher growth in home credit, it is important to ensure that it does not play a decisive role in the evolution of prices in the real estate market,” the report says.
The regulator also emphasizes that “the adoption of a macroprudential recommendation for new loans has led to an improvement in the risk profile of borrowers and the characteristics of the housing loan portfolio.” Finally, it acknowledges that “loan-to-mortgage portfolio value indicates resilience to a correction in residential real estate.”
However, the risk exists and even deserves more BdP analysis. Based on a statistical model that analyzes the distribution of house price changes in Portugal in 2021, “driven by the prevailing financial and economic situation” this year, the regulator points to “the expectation of deterioration in house prices from 2023”. until 2024 in a central plant.” At the same time, he predicts “an increase in uncertainty” from 2023.
“The current circumstances and this analysis justify the need to continue monitoring risks in the residential real estate sector, in particular in the context of the normalization of monetary policy and the continuation of the dynamics of house price growth,” concludes BdP.
The financial situation of the family may worsen
Added to the risk of real estate price adjustments is a deterioration in the financial situation of families as a result of higher interest rates and inflation, which, in turn, can lead to an increase in loan defaults.
“In the current macroeconomic and geopolitical environment, along with the expected rise in market interest rates, the financial situation of individuals may worsen, which will increase the risk of default,” acknowledges BdP. “In Portugal, the share of floating rate housing loans is around 90%, which leads to an increase in market interest rates, which leads to an increase in debt servicing. The most common index is the 12-month Euribor. Added to this effect is a reduction in real disposable income and the impact of the pandemic crisis on the financial situation of some families,” he adds.
However, the regulator emphasizes that “there are factors that reduce the risk of default by individuals”, highlighting the decline in debt that was observed in the period before the pandemic and affected families with different income levels. At the same time, there was an “improvement in the risk profile of new borrowers as a result of the macroprudential recommendation.”
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World
Vladimir Putin has delayed the invasion of Ukraine at least three times.
Putin has repeatedly consulted with Russian Chief of the General Staff Valery Gerasimov and Defense Minister Sergei Shoigu about the invasion, Europa Press told Ukraine’s chief intelligence director Vadim Skibitsky.
According to Skibitsky, it was the Russian Federal Security Service (FSB), which is responsible for counterintelligence and espionage work, that put pressure on Gerasimov and other military agencies to agree to launch an offensive. .
However, according to the Ukrainian intelligence services, the FSB considered that by the end of February sufficient preparations had already been made to guarantee the success of the Russian Armed Forces in a lightning invasion.
However, according to Kyiv, the Russian General Staff provided the Russian troops with supplies and ammunition for only three days, hoping that the offensive would be swift and immediately successful.
The head of Ukrainian intelligence also emphasized the cooperation of local residents, who always provided the Ukrainian authorities with up-to-date information about the Russian army, such as the number of soldiers or the exact location of troops.
The military offensive launched on February 24 by Russia in Ukraine caused at least 6.5 million internally displaced persons and more than 7.8 million refugees to European countries, which is why the UN classifies this migration crisis as the worst in Europe since World War II (1939-1945). gg.). ).
At the moment, 17.7 million Ukrainians are in need of humanitarian assistance, and 9.3 million are in need of food aid and housing.
The UN has presented as confirmed 6,755 civilian deaths and 10,607 wounded since the beginning of the war, stressing that these figures are much lower than the real ones.
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World
Life sentence for former Swedish official for spying for Russia
A Stockholm court on Monday sentenced a former Swedish intelligence officer to life in prison for spying for Russia, and his brother to at least 12 years in prison. In what is considered one of the most serious cases in Swedish counterintelligence history, much of the trial took place behind closed doors in the name of national security.
According to the prosecution, it was Russian military intelligence, the GRU, who took advantage of the information provided by the two brothers between 2011 and their arrest at the end of 2021.
Peyman Kia, 42, has held many senior positions in the Swedish security apparatus, including the army and his country’s intelligence services (Säpo). His younger brother, Payam, 35, is accused of “participating in the planning” of the plot and of “managing contacts with Russia and the GRU, including passing on information and receiving financial rewards.”
Both men deny the charges, and their lawyers have demanded an acquittal on charges of “aggravated espionage,” according to the Swedish news agency TT.
The trial coincides with another case of alleged Russian espionage, with the arrest of the Russian-born couple in late November in a suburb of Stockholm by a police team arriving at dawn in a Blackhawk helicopter.
Research website Bellingcat identified them as Sergei Skvortsov and Elena Kulkova. The couple allegedly acted as sleeper agents for Moscow, having moved to Sweden in the late 1990s.
According to Swedish press reports, the couple ran companies specializing in the import and export of electronic components and industrial technology.
The man was again detained at the end of November for “illegal intelligence activities.” His partner, suspected of being an accomplice, has been released but remains under investigation.
According to Swedish authorities, the arrests are not related to the trial of the Kia brothers.
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World
Ukraine admitted that Russia may announce a general mobilization
“They can strengthen their positions. We understand that this can happen. At the same time, we do not rule out that they will announce a general mobilization,” Danilov said in an interview with the Ukrainska Pravda online publication.
Danilov believed that this mobilization would also be convened “to exterminate as many as possible” of Russian citizens, so that “they would no longer have any problems on their territory.”
In this sense, Danilov also reminded that Russia has not given up on securing control over Kyiv or the idea of the complete “destruction” of Ukraine. “We have to be ready for anything,” he said.
“I want everyone to understand that [os russos] they have not given up on the idea of destroying our nation. If they don’t have Kyiv in their hands, they won’t have anything in their hands, we must understand this,” continued Danilov, who also did not rule out that a new Russian offensive would come from “Belarus and other territories.” .
As such, Danilov praised the decision of many of its residents who chose to stay in the Ukrainian capital when the war broke out in order to defend the city.
“They expected that there would be panic, that people would run, that there would be nothing to protect Kyiv,” he added, referring to President Volodymyr Zelensky.
The military offensive launched on February 24 by Russia in Ukraine caused at least 6.5 million internally displaced persons and more than 7.8 million refugees to European countries, which is why the UN classifies this migration crisis as the worst in Europe since World War II (1939-1945). gg.). ).
At the moment, 17.7 million Ukrainians are in need of humanitarian assistance, and 9.3 million are in need of food aid and housing.
The Russian invasion, justified by Russian President Vladimir Putin on the need to “denazify” and demilitarize Ukraine for Russia’s security, was condemned by the international community at large, which responded by sending weapons to Ukraine and imposing political and economic sanctions on Russia.
The UN has presented as confirmed 6,755 civilian deaths and 10,607 wounded since the beginning of the war, stressing that these figures are much lower than the real ones.
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