By Chrysostomos Tsoufis

Accuracy on the shelf, accuracy at the pump, accuracy also at the counter. According to the ECB database, Greek banks offer some of the most expensive loans in the Eurozone.

As of June 2023, the average housing interest rate in Greece is above 4% (plus some margin of course). In February this year it reached its highest value, 4.52% and in April it was at 4.33%, which is the 5th highest value in the Eurozone behind the Baltic countries and Cyprus:

1. Latvia 5.95%
2. Estonia 5.71%
3. Lithuania 5.58%
4. Cyprus 4.49%
5. Greece 4.33%

What is encouraging, however, is that the data show that the “gap” with the Community average has narrowed from 68 to 56 points in the last quarter for which data is available:

February 2024

Greece 4.52% – Eurozone 3.84%

April 2024

Greece 4.33% – Eurozone 3.77%

On the contrary, the cheapest mortgages enjoy:
Belgium 3.43%
France 3.49%
Spain 3.51%

The situation is slightly better in business loans with Greek companies facing the 6th highest fees, at 6.04%, 86 points above the Community average. A business loan in Greece is more expensive today than it was in May 2014, at the heart of the memorandum era (5.96%). And here, in fact, the distance from the EU average has increased slightly from 83 to 86 points. The relevant ranking is as follows:

1. Latvia 6.7%
2. Estonia 6.66%
3. Ireland 6.39%
4. Lithuania 6.27%
5. Slovakia 6.19%
6. Greece 6.04%

The most….human business lending environment they offer:
Luxembourg 4.03%
Netherlands 4.36%
France 4.81%

In consumer loans, Greek banks get…a medal as they offer the third most expensive at 10.81%. However, we must say that from August 2023, when they had reached 11.9%, a de-escalation is observed:
Estonia 14.76%
Latvia 13.26%
Greece 10.81%

The disheartening picture for the Greeks is completed by the interest rates on deposits that are (not) given.
As of September 2021 the overnight rate for households is stuck at 0.03%, the lowest in Europe.
For term deposits of up to 1 year, Greek depositors are the second most disadvantaged in the Eurozone, behind only Slovenians with 1.84% compared to the EU average of 3.14%. A situation that has worsened over the past 8 months.

On the contrary, the most….premiumed depositors in the Eurozone:

Estonia 3.71%
France 3.7%
Italy 3.54%

It is not surprising that the Bank of Greece announced that the gap between the average deposit rate and the average lending rate is 5.45% for April. Smaller than March’s 5.71%, but higher than February’s 5.24%.

All these figures were released a day before the ECB backfired and cut its key interest rates. In a few hours the Christine Lagarde will announce the reduction of 0.25 points, the first since September 2019.

However, borrowers with a mortgage will not see any difference in their installment. Banks have frozen rates on 400,000 existing loans at the March 2023 level and at 3% until March 2025. For those to see a rate cut, the prime rate would have to fall below 3%.

Contrary to all new loans regardless – regardless of type – as well as existing business and consumer loans, logically the previously announced reduction must pass by…tomorrow itself.