How the subsidy will work for consistent borrowers – Detailed examples

Within the next few days and certainly before the end of the year, the road map for subsidizing the difference by 50%, between the installment paid by a consistent borrower from the summer until today, as a result of the increase in interest rates, will be known.

As the Minister of Finance Christos Staikouras stated in Parliament last Friday it is the first time that banks undertake the support of consistent borrowers, without incurring fiscal costs. He also noted that “the measures announced by the banks are a good first step! Financial institutions will move faster and more decisively. After all, this is in the interest of the stability of the system and the strengthening of competition”.

Sources from the Ministry of Finance said that they would have liked the package of measures to be bolder, but this was not possible, mainly due to the attitude of the SSM on such issues. However, satisfaction is expressed that a large number of borrowers, who in fact belong to the vulnerable category, will benefit.

Christos Staikouras, in order to explain the difficulty that exists for the package to be brave, took the position expressed by the Bank of Greece, according to which “any change in the characteristics of the scheme, either with regard to the enlargement of the perimeter, or with the subsidy rate of the tranche, endangers the existing supervisory assessment, with what this implies for the asset quality of the Greek banks, the ratios of loans in arrears and their capital adequacy”.

But what does the banks’ proposal mean for the 30,000 borrowers it concerns. Let’s look at some typical examples.

1. A borrower who had received a loan of 100,000 euros and a repayment period of 15 years and a floating interest rate (Euribor plus 3 units) paid last summer an installment of 696.37 euros per month (interest rate of 3%, since the Euribor was negative. Now with the Euribor that expected in the coming days to be 2.5%, the interest rate will rise to 5.5% and the installment will rise to 823.47 euros per month. That is a difference of 127.1 euros and on an annual basis 1,525.2 euros. With based on the package announced by the banks, the subsidy for the beneficiaries will be 762.6 euros.

2. In the event that the duration of the loan is 20 years, then the monthly charge amounts to 134.06 euros per month, since the installment from 560.62 euros in July 2022, will rise to 694.68 euros. On an annual basis, the burden will be 1,608.72 euros and the subsidy of the banks to the beneficiaries will be of the order of 804.36 euros.

The plan to be implemented has seven axes:

1. Beneficiaries: Borrowers with a housing loan or even a small business loan, which is secured by collateral in the 1st residence.

2. Income criteria, as defined in Law 4472/2017 for inclusion in vulnerable status, that is:

• annual income up to 7,000 euros, increased by 3,500 euros, per family member, with a limit and maximum annual income of 21,000 euros

• maximum value of main (first) residence 180,000 euros (based on ENFIA calculation value) and

• total deposits up to 7,000 euros, increased by 3,500 euros for each family member with a total deposit limit of 21,000 euros.

3. Outstanding debts: Existing outstanding debts, i.e. loans in arrears up to 90 days, with a reference point (for the outstanding or not) the date of submission of the request by the creditor. Debts arising from new loans granted after today’s date are not eligible.

4. Subsidy rate: 50% of the interest rate increase (with the calculation date of the increase on 30.6.2022). The subsidy will be stopped if the debtor becomes delinquent in servicing his installment for a period of time longer than 30 days.

5. Subsidy scheme: Creation of a corporate social responsibility fund, with equal contributions from the 4 systemic banks, which will however be managed by a third party (EGDIX) through the GEFYRA platform, to which the beneficiary’s application will also be submitted.

6. Duration of subsidy: 12 months.

7. The deadline for submitting the application will be set and announced.

RES-EMP

Read the News today and get the latest news.
Follow Skai.gr on Google News and be the first to know all the news.