Greek household incomes have faced a sharp squeeze after a series of interest rate hikes by the European Central Bank since July resulted in a rise of about 10%-25% in monthly mortgage loan payments. In separate statements on Tuesday, Piraeus Bank and Eurobank said they would freeze their floating interest rates on outstanding mortgage loans from next month to April 2024, by referencing them on March's Euribor rate minus 20 basis points. Finance Minister Christos Staikouras told Real FM radio that National Bank of Greece and Alpha Bank were expected to announce similar moves to stabilize the borrowers monthly payments to existing levels.
Greek bankers estimate that up to 500,000 borrowers who have
been servicing their mortgage loans would benefit from the
measure.
"The potential cost for the banks could be up to 200 million
euros ($218.10 million) depending on future interest rate hikes
from the European Central Bank," one banker told Reuters on
condition of anonymity.
Greek banks have seen an increase in demand for new mortgage
loans as the economy recovers after a decade-long debt crisis
and the COVID-19 pandemic. They reported a total of 3.5 billion
euros of net profit last year on the back of higher interest
rate margins.
The average interest rate on Greek mortgage loans stood at
4% in January this year, up from 3.1% in 2022, data from the
Bank of Greece showed. The vast majority of outstanding mortgage
loans worth 27 billion euros in Greece carry a floating interest
rate.
($1 = 0.9170 euros)
(Reporting by Lefteris Papadimas; Editing by Mike Harrison)
