Mortgage credit expected to grow by 30% in Greece during 2019

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Mortgage credit expected to grow by 30% in Greece during 2019Following several years of very low activity

Greek banks are expecting a recovery in the mortgage loan market in 2019 after several years of very low activity, with talk of 30 percent annual growth in new credit, ekathimerini.com reports.

This comes on top of the 20 percent rise in demand last year that took new bank financing to the housing market from 260 million euros in 2017 to almost 320 million euros in 2018.

According to bank numbers, the average mortgage loan amounted to 70,000 euros last year, while new issues are now made on stricter terms than in the past. A necessary condition is the borrower’s participation in covering at least 25 percent of the cost of the property purchase. The borrower’s contribution largely dictates the interest rate level, which ranges from 4 percent to 5.5 percent for the purchase of a house, while for repair loans that are not secured against the property the rate ranges between 7 and 8 percent.

The state subsidy program Saving at Home (Exoikonomisi Kat’ Oikon) provided a further boost to the housing loans market last year, as banks disbursed an additional 40 million euros through the scheme, raising the total amount of new loans in the housing sector to 360 million euros.

Naturally, these figures are nowhere near the past highs recorded in this market, when bank funding powered the economy. However, the return of the credit sector to funding residential property purchases is generating optimism regarding both the increase in bank activity and the strengthening of the credit sector’s interest revenues, which in recent years had been in constant decline.

This improvement comes in the context of the property market recovery during the last couple of years, which Moody’s said on Tuesday will continue for at least the next 12 to 18 months.

In 2018 house sale prices rose 1.5 percent year-on-year across the country. This was attributed to the increased flow of foreign investment and the improving macroeconomic environments. Moody’s added that this is also positive for the valuation of Greek bonds, banks and loans secured against real estate. The rise in property values is also set to offer borrowers additional incentives to refinance their mortgage loans, Moody’s estimated.

RELATED TOPICS: GreeceGreek tourism newsTourism in GreeceGreek islandsHotels in GreeceTravel to GreeceGreek destinations Greek travel marketGreek tourism statisticsGreek tourism report

Photo Source: Wikimedia Commons License: CC-BY-SA Copyright: athenswalk

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