Shielded from the new interest rate hikes announced by its president European Central Bank (ECB) Christine Lagarde last week it was the Greek borrowers. If there is no significant change in our outlook, then we will continue to raise interest rates in July, the ECB president said, adding that it is unlikely that the central bank will declare with certainty in the near future that interest rates have reached a high level.

However, the decisions of the ECB, whenever and if they are announced, not only have no impact on approximately 500,000 informed mortgage borrowers with floating rate as they are already shielded from the beginning of May 2023 to interest rate increases, while they have also seen a reduction in their installments, 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 informed housing loans that are shielded from the increases according to convergent estimates amount to approximately 20 billion euros.

The aim of the reward programs, as the banks have announced, was in any case to reduce the current interest rates on variable rate mortgages while at the same time protecting borrowers from possible future increases in benchmark rates. Fixed rate mortgages are not included in the reward programs as they 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 and it concerns the installments of 12 months starting with the installment they have to pay in June.

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

Consistent borrower reward programs announced by each bank separately apply to all who pay off a variable rate mortgage or repair loan. But they have some key points in common. The new interest rate is fixed at the interbank reference rate, as it was set on 3/31/2023, reduced by approximately 20 basis points, with this rate remaining constant for the next 12 months.

Unless in the context of monetary policy the benchmark interest rate is reduced to lower levels. For loans based on Euribor one month, the interest rate stabilizes at 2.70%, while for those based on three-month Euribor it is set at the levels of 2.83% – 2.85%. To the above reference interest rate is added the margin of the interest rate agreed between the borrower and the Bank and any levy of Law 128/75.

As has been announced, a necessary condition for inclusion in the program is that the loan is fully up-to-date, while the loan must be disbursed no later than 21.12.2022. Natural persons who repay a housing loan benefit from the program, 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 Banks 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 of the reward programs themselves

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 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.