A few months ago, the global financial sector began to show signs of concern, especially in the United States, due to the collapse of First Brands, Tricolor Holdings, and the credit fraud cases of regional banks Zions Bancorporation and Western Alliance. Credit panic began to set in in the markets, also on the Old Continent, with stock market declines contagious from Wall Street. Just a few days ago, the bankruptcy of the British mortgage broker MFS (Markets Financial Solutions) also splashed several lending entities, including Barclays and Banco Santander, with a millionaire credit exposure.

We usually see debt as something negative, and having loans can keep us up at night. For this reason, many people decide to pay off their loans early to get "debt-free." But is it always worthwhile to do so? In our country, most loans use the French amortization system. This means that each payment covers a portion of the principal and a portion of the interest. Contrary to what many believe, the interest isn't always the same amount: it's calculated based on the outstanding balance. Thus, at the beginning of the loan, we pay significantly more interest than at the end. For example, on a €50,000 loan to be repaid over 60 months with an APR of 5%, the monthly payments would be €941. In the first payment, we would repay €737 of the principal and €203 of interest. However, in the final payment, we would repay €937 of the loan, and only €4 would be interest. Therefore, in the French system, interest rates decrease as the loan term progresses. This means that it's usually not advantageous to pay off a loan towards the end of its life, since most of the interest has already been paid, and therefore, we could say that the remaining money is "almost free."

After Malta, Spain has the cheapest mortgages in the eurozone. This is one of the factors contributing to the constant rise in housing prices, as supply is growing at a much slower pace than demand. Comparing the average interest rate for home purchases in August, the latest published figure for Spain is 2.69%, well below the eurozone average of 3.31% and the rates in countries like Germany (3.71%), France (3.01%), and Italy (3.28%). Demand for home loans is growing rapidly, according to the latest Bank of Spain survey for the second quarter.

Imagine you have €50,000 in your account and you need to make a payment of exactly that amount to buy a car. You have two options: pay it all in cash or apply for financing for the same amount. The first option seems the safest, since it frees us from any future obligations, but at the same time it decapitalizes us and leaves us with no available savings. In contrast, the second option allows us to keep the €50,000 in the account and pay for the vehicle in installments. The secret lies in the return we can obtain from that money.

Demand for credit, especially mortgages, will continue to rise in the coming months, according to bank forecasts. In the period from January to March of this year, it already experienced a significant increase for the fourth consecutive quarter, thanks to the downward trend in the Euribor, the main benchmark for variable-rate mortgages, and the relaxation of conditions imposed by financial institutions.

Employers' association Pimec claims 48% of the almost 150,000 Catalan companies that obtained a state-secured loan during the beginning of the pandemic will have problems to return the money. This is extracted from a survey of 417 companies, with the results of which the employer has asked for debts repayments to be postponed or cancelled, either fully or partially, in order to avoid "consequences that would be much worse," as explained Pere Cots, Pimec's director of strategic consulting.