Athens, (EFE).- The four largest banks in Greece will assume the increases in mortgage interest rates for one year, starting in May, to help households cope with rising housing costs .
In separate statements, Piraeus Bank, Eurobank, and Alpha Bank reported on Tuesday that they will freeze their variable interest rates on outstanding mortgage loans from next month until April 2024, referencing them to March Euribor minus 20 basis points.
The money available in Greek households has shrunk as interest rates have been raised by the European Central Bank, with monthly mortgage payments rising by between 10% and 25%.
Finance Minister Jristos Staikuras said on private Real FM radio that the National Bank of Greece is also expected to announce similar measures to stabilize borrowers’ monthly payments at current levels.
It will benefit about 500,000 Greeks
According to the local press, up to 500,000 citizens with mortgages would benefit from the measure.
Other smaller banks will also adopt similar measures “soon”, Staikuras said in a statement, stressing that the cost of the measures will be borne by the banks and not the state budget.
Greek banks have seen a surge in demand for new home loans as the economy recovers from a decade-long financial crisis and the coronavirus pandemic.
Higher profits in banking thanks to interest rates
In 2022, Hellenic banks had around €3.5bn in net profit thanks in part to higher margins due to higher interest rates.
The average interest rate on Greek home loans stood at 4% in January this year, up from 3.1% in 2022, according to data from the Bank of Greece.
The vast majority of outstanding mortgage loans in Greece – valued at around 27 billion euros – have a variable interest rate.