Greek banks aim at mortgage loans of 100m. euros per month, in 2022

During the new year, Greek banks aim at granting mortgage loans of 100 million euros on average per month.

According to bank sources, 2021 closed with disbursements of over 900 million euros. These are figures increased by 50% on an annual basis, while, in comparison with 2019, the increase exceeds 100%.

For this year, the banks’ plans envisage new financing in mortgage credit of at least 1.20 billion euros, as the relevant demand from households is expected to further strengthen.

These levels are, of course, light years away from the highs of the first decade, after the country joined the eurozone. It should be noted that, in 2007, about 11.7 billion euros were given by the banks. That is, almost 1 billion euros on a monthly basis.

However, banks even estimate that the numbers could move upwards until 2026, as the real estate market and related investments will recover.

Bank interest rates

According to the same sources, the substantial zeroing of interest rates on simple deposit products works in this direction. Now, those, who have liquidity that until a few years ago, definitely enjoyed interest rates of up to 5% without risk for their initial capital, are looking for high returns.

“The property is a relatively safe investment for Greeks. Especially, today, with the rise in rents, both in the short and long term, it has become for the first time, after the financial crisis, an extremely attractive choice”, notes a member of a systemic group.

They also add how the banks, already anticipating the recovery of real estate from 2018, have proceeded to the launch of new, safer and more attractive programs.

Fixed installment

Last year, according to the Bank of Greece, half of the new loans were granted with fixed long-term interest rates, even for the full repayment rate, while, in some banks, this percentage was in the 90% range.

With these products, borrowers ensure that their monthly installment in a long-term program such as a mortgage, will remain stable for several years, regardless of the course of European interest rates.

On the other hand, the floating interest rate may be low today, but no one can safely predict how the EURIBOR interbank indices will move in the next 10-15 years.

After all, the discussions of tightening monetary policy in the Eurozone, sometime in the next two years, has already begun. So, for someone who does not want to take any risks, fixed interest rates are the only way.

For 10 to 30 years they are currently moving in the range of 3% – 4%. This means that a fixed installment for 25 years can start at 450 euros per 100,000 loan.

So, instead of paying a rent of 900 euros for their housing, they have the option to use this money to repay a loan of 200,000 euros, with which they will acquire their own house. Provided, of course, that they will also participate with 20% of its purchase price.