By Chrysostomos Tsoufis

In his regular Sunday message on social media, the Prime Minister made special mention of the program “My house”, through which 6,500 couples have contracted their loan to be able to buy their home.

However, the general picture is not so encouraging. In the latest financial stability report, the Bank of Greece states that in the last 2 years there has been a decrease in the demand for housing loans mainly due to successive interest rate increases. A trend that unfortunately continued in the first 2 months of this year as the granting criteria have also been tightened.

It is known that in 2023, the loans made secured by residential property (including consumer or repair loans as well as loans to freelancers and sole proprietorships) just exceeded €1 billion, reduced by 9.5% compared to 2022.

The figures of the Ministry of Finance show that a total of 14,621 loans were signed and the average value of the disbursement was found at €68,700, reduced by 14% compared to the €78,800 which was the average disbursement of the corresponding loans in 2022.
94.7% of the loans were given as expected by the big 4 systemic banks. 5.4% is the share of the smallest commercial banks and only 0.7% of cooperatives.

The average disbursement corresponds to 62% of the value of the mortgaged property from 62.9% in 2022. 9 out of 10 loans are less than 80% of the value of the mortgaged residential property.

The loan ratio to income at issuance was set at 3.7 which means the loan amount is almost 4 times higher than the borrower’s declared annual income.
However, based on the classification of the Central Bank, 72% of the loans disbursed belong to the category of low risk of default. 26.9% belongs to the middle class and only 0.8% is given to borrowers who do not have sufficient income and therefore a satisfactory ability to service the loan.

Almost all borrowers who take out a loan have the goal of purchasing a property for their own residence. Less than 3 out of 100 loans concern the purchase of a property to be rented.

Almost all loans are fully delinquent.

  • 55% of loans have an initial fixed rate period of more than 10 years
  • 17% of loans have an initial fixed interest rate for the first 5-10 years
  • 1/10 loans (11.6%) have an initial fixed rate of up to 12 months with the BoE noting that the majority of borrowers are protected from further increases in prime rates.
  • The average loan lasts 23.7%
  • 1/5 loans have a duration of up to 15 years and a 5% over 30.