Around 500,000 aware variable rate mortgage borrowers are armored in the new interest rate increase of the European Central Bank (ECB) by 0.25 points announced on Thursday, as well as the new increases announced by the head of the Bank, Christine Lagarde.

After the new increase, the key deposit rate of the ECB stands at 3.25%. The informed housing loans that are shielded from the increases according to convergent estimates amount to approximately 20 billion euros.

In any case, consistent borrowers will see and dose reductionof them, according to the reward programs for consistent borrowers announced and implemented by the banks in our country. Similar programs have been announced and implemented by loan management companies.

The aim of the reward programs, as the banks have announced, is in any case to reduce the current interest rates of variable rate mortgages and at the same time to protect borrowers from possible future increases in the reference interest rates. The reward programs do not include fixed rate mortgages or mortgages whose interest rate is set on the basis of the Basic Mortgage Interest Rate, as these are not affected by the change in interbank reference rates.

Borrowers who fall within the scope of application of the reward programs have automatically joined the program announced by each bank without requiring any action on their part.

The new reward programs for consistent borrowers implemented by the banks follow the installment subsidy program for vulnerable households’ mortgages (Vulnerable Program) announced in February.

With this specific program, 50% of the increase in the monthly mortgage installment is subsidized with a reference date of 30/6/2022 and for a period of 12 months. The period of availability of the specific program has been extended until 31/7/2023 (date until which applications can be submitted), while the first subsidies are expected to be given in the immediate future.

Freeze on floating rates – What has been announced

Consistent borrower reward programs announced by each bank separately apply to all those paying off a variable rate mortgage or repair loan. But they have some key points in common. The new interest rate will be at the interbank reference rate, as it was set on 31/3/2023, reduced by approximately 20 basis points, with this rate remaining constant throughout the 12-month period. Unless in the context of monetary policy the benchmark interest rate is reduced to lower levels. For loans based on one-month Euribor, the interest rate stabilizes at 2.70%, while for those based on three-month Euribor it is set at 2.83% – 2.85%.

As announced, a necessary condition for joining the program is for the loan to be fully informed, while the loan must have been disbursed by 21.12.2022 at the latest. The program will benefit natural persons repaying a mortgage loan, regardless of whether it is a first residence or not.

Up-to-date mortgages also include loans that have been settled recently, provided that the borrower does not owe any installments. Also included are all mortgages in a currency other than Euro, as well as at a different interest rate than Euribor (e.g. Swiss Franc and/or Libor, MRO EKT, etc.).

In the announcements made by the Banks last month, they pointed out that the new initiative is part of the institutional dialogue with the State, confirming their support to the country’s households by rewarding consistent borrowers and at the same time supporting their vulnerable customers, assuming the costs themselves of reward programs

Borrowers, in order to remain in the program and enjoy the reduced installment, should pay their loan installments regularly, as a delay of even one installment is enough to get out of the program

Initiatives also from the Management Companies

Initiatives to freeze interest rates on informed mortgage loans have also been announced by the Loan and Credit Claims Management Companies, having formulated and put into effect appropriate programs with the aim of freezing the floating base interest rates, for informed mortgage loans of private borrowers (natural persons). The above programs have come into effect and will be valid for twelve months.

The specific initiatives have been specialized by loan portfolio and are aimed at providing assistance to consistent borrowers who may be facing difficulties repaying their respective debts due to rising interest rates.

Each Management Company has formulated the conditions and criteria for belonging to the respective program, according to its procedures and policies. Borrowers (natural persons) with informed variable rate mortgages will automatically be included in the above favorable programs, without requiring any action on their part. For more details, each borrower can contact the Management Company they work with.

As the Management Companies have pointed out, they provide an additional number of settlement possibilities to any debtor who wishes to settle his debt on sustainable terms. For the first half of 2023, the Management Companies have set a target for loan arrangements and arrangements to reach 3.2 billion euros, increased by more than 30% compared to the same period in 2022.