Chrysostomos Tsoufis

In one week, the ECB will cut interest rates once more, barring an extraordinary 25 basis points.

This will be the fourth rate cut since June and in total these 4 cuts add up to 100 basis points.

Although we are in the heart of the interest rate reduction process, for Greek banks it is Monday.

The figures of the Bank of Greece show that they have not fully passed these reductions in the interest rates of the loans they grant, while in some cases they have already increased them.

Where it’s (almost) type and underscore is in mortgages.

A new variable rate mortgage had an interest rate of 4.7% in June.

In October, after 3 reductions by the ECB totaling 75 basis points, the same loan has an interest rate of 4%.

In other words, the banks have completely passed the reductions on new mortgages.

From then on, as the table below shows, the overall picture “grays” a lot. In business loans the reduction is much smaller than 75 points:

Loan Type June Interest Rate October Interest Rate

Business 6.61% 6.02% (-59 points)
Without
Determined
Duration

Business 5.41% 4.98% (-43 points)
With
Determined
Duration

Professional 7.55% 7.41% (-11 points)
Without
Determined
Duration

Source: Bank of Greece

In consumer products – in which there are much greater risks – the interest rates have increased!

Loan Type June Interest Rate October Interest Rate
Consumer 14.92% 14.95% (+3 points)
Without
Determined
Duration

Consumer 12.23% 12.20% (- 3 units)
With
Determined
Duration

Source: Bank of Greece

Somehow, since when interest rates were rising Greek banks were among the most expensive in the Eurozone, so even now that they are falling, they remain in their … position.

In consumer loans, only the banks of the Baltic countries are more expensive:

Latvia 13.96%
Estonia 13.32%
Greece 10.86%
Eurozone 7.67%

Source: ECB

The average mortgage loan in Greece is 27 units more expensive than the Community average and the 7th most expensive in the Eurozone:

Estonia 4.97%
Latvia 4.86%
Lithuania 4.76%
Cyprus 4.29%
Slovakia 4.09%
Ireland 3.86%
Greece 3.77%
Eurozone 3.5%

Source: ECB

To the victims and the Greek companies that are obliged to borrow at the 6th highest interest rate in the Eurozone:

Latvia 6.3%
Lithuania 5.59%
Slovakia 5.35%
Ireland 5.07%
Malta 5.05%
Greece 5.02%
Eurozone 4.57%

Source: ECB

Icing on the cake are household deposit rates, which in Greece are among the lowest in the Eurozone

One day Up to one year
Cyprus 0 Cyprus 1.74%
Croatia 0.02% Greece 1.84%
Portugal 0.02% Eurozone 2.73%
Greece 0.03%
Eurozone 0.36%

In this climate, the Prime Minister’s announcements on improving competition in the banking system, which are expected in the discussion of the budget vote, are of particular interest.