Chrysostomos Tsoufis

Since last July, we have entered a period of continuous increase in interest rates and the banks – after constant urgings, annoyances from the Ministry of Finance – are careful to set up a shield that will prevent further rate increases.

So they are studying a horizontal protection plan for the borrowers, putting a ceiling on the 3-month Euribor rate, which is also the basic pricing rate for variable mortgages, thus essentially turning them into a fixed rate.

The specific interest rate follows the evolution of its key interest rates ECB, which means that since last July it has been constantly increasing and from -0.18% on 1/7 it has increased to 3.05% yesterday, April 5th.

The banks are reportedly aiming to set the ceiling at 2.85%, the level at which Euribor was at the beginning of March, taking on the excess costs themselves.

According to the banking plan, the “shield” that will be “raised” will have a duration of 12 months and the intention is to have “relaxed” application criteria.

That is, as long as it gets the green light from the supervisory bodies to apply to the entire portfolio of mortgage loans of the banks with the exception of those that cover high-value real estate or do not concern a first residence.

According to Christos Staikouras in the coming days, developments on this front should be expected.

At the same time, the government legislated, increasing by 30% the income and property criteria, to expand the perimeter of vulnerable households that will be subsidized by the protection mechanism that the banks have also set up at their own expense.

The mechanism will subsidize for 12 months 50% of the installment increase of a housing unit with a reference date for calculating the increase on June 30.

From the discussions between the Ministry of Finance and Banks, it emerged that approximately 70,000 borrowers who mainly took out a mortgage in the period 2006-2010 are particularly vulnerable to the increases so far. The expansion of the criteria is also aimed at them, which are now as follows:

Income:

€9,100 for a one-person household (from €7,000)
€13,650 for a household of 2 members (from €10,500)
€18,200 for a household of 3 members (from €14,000)
€22,750 for a household of 4 members (€17,500)
€27,300 for a household of 5 members or more (from €21,000)

Assets:

€156,000 for a single-member household (from €120,000)
€175,500 for a household of 2 members (from €135,000)
€195,000 for a household of 3 members (from €150,000)
€214,500 for a household of 4 members (from €165,000)
€234,000 for a household of 5 members or more (from €180,000)

A mortgage loan of €100,000, 15-year repayment, from the €672 installment in July, has now risen to €810.

Half, i.e. €69 out of €138 of the total increase, will be subsidized every month by the protection mechanism.

For those who have already had their loan defaulted, the Ministry of Finance refers to the out-of-court mechanism which has increased speed as 150-200 new arrangements are made every week.

In addition, the financial staff does not stop sending messages to banks and servicers to offer sustainable arrangements even if they are already arranged loans.