Rising in relation to the years of the economic crisis know the loan disbursements secured by residential properties, but far from the record levels reached in the mid-first decade of the 2000s.

In particular, according to data from the latest Financial Stability report of the Bank of Greece, the disbursements concern loans secured by residential properties regardless of the purpose of the loan, i.e. housing, repair and consumer loans are included, but also loans to freelancers and sole proprietorships.

New disbursements in 2023 are just over one billion euros – Estimates for an increase in 2024

In particular, according to the latest available data for 2023, loan disbursements secured by residential properties amounted to 1.004 billion euros, reduced by 9.5% compared to 2022 and remain low both in absolute terms and in comparison to the level before the global financial crisis.

The fact that the new disbursements were not accompanied by a relaxation of the credit criteria is considered important. The analysis of key indicators, TTE reports, shows that credit institutions are applying prudent lending practices so far.

In total in number they signed 14,621 new loan contracts.

In 2023 the average loan disbursement amounted to 68,700. euros, reduced compared to 2022 which was set at 78,800 euros.

The market share of the four major credit institutions in terms of disbursements of loans secured by residential properties amounted to 93.9%, slightly reduced compared to 2022 (94.7%). The less important commercial banks and cooperative banks had a market share of 5.4% and 0.7% respectively. Finally, the market share of branches of foreign credit institutions was negligible.

According to the available data of the Bank of Greece, most disbursements (97.4%) are intended for the purchase of residential property for owner occupancy, while only 2.6% concern loans for the purchase of residential property for rent.

Almost all of the new disbursements concern fully defaulted loans

Disbursements on loans with an initial fixed rate period of more than ten years represent 55% of all new loans, and disbursements on loans with an initial fixed rate period between 5 and 10 years represent 17% of the total. Consequently most new disbursements have a long fixed rate period, which protects borrowers from further increases in prime rates.

Loan disbursements with an initial fixed rate period of less than or equal to one year represent just 11.6% of all new loans.

The average duration of the loan – In the low risk category the new loans

The average loan term at issuance is 23.7 years. 20% of new loan agreements have a duration of up to 15 years, 37% have a duration of 15 to 25 years, while 38% have a duration of 25 to 30 years and the remaining 5% over 30 years.

Most of the disbursements (i.e. 72.3%) are classified in the low risk category, therefore to borrowers with sufficient income and satisfactory loan servicing capacity.

26.9% of loan disbursements are classified as medium risk.

Disbursements of loans classified in the high-risk category (shaded red) account for just 0.8% of the total.

As the Bank of Greece points out, the analysis of the above indicators shows that credit institutions also applied prudent lending practices in 2023 with regard to loans secured by residential properties. The slight deterioration observed in income-related indicators is partly attributed to the loan disbursements made in the second half of 2023 under the “My Home” program, whose financing terms are more favorable than those adopted by banks in their credit policies.

According to convergent estimates from bank executives, during 2024 the disbursements of new loans secured by real estate will far exceed one billion euros, with the average loan fluctuating at approximately the same levels as in 2023. A significant contribution to the increase in disbursements will also be the “My Home” program for young people up to 39 years old.

In conclusion, in relation to the years of the financial crisis, new loans in housing credit have marked a substantial increase, since on an annual basis they ranged around 400 million euros for a number of years. However, they fall significantly short of the record levels reached in the years preceding the crisis and reached 15 billion euros on an annual basis, levels however – as has been pointed out by bank executives – are not really comparable to today’s data nor are they a goal.

According to converging estimates of banking executives, bank financing in the home loan sector is open to households that meet the creditworthiness criteria, pointing out that about 8 out of ten home loan applications are approved.