Greece’s mortgage market has registered consecutive negative records, with Greece being the only country in the European Union to be in negative territory for housing loans over the last three years.

With the decline in mortgage lending extending beyond the last three years due to the previous financial crisis, it is clear that mortgages are the main problem in the banking system, despite the fact that funding costs and interest rates for the housing market have fallen to average European levels.

The average interest rate in the country is 4%, down from a year ago and in line with the European average, but the annual financing rate was -2% at the end of July, compared with -3% a year ago and -2% over the last three years.

This is according to the report published by the European Systemic Risk Board (ESRB), which warns of financial stability in the euro area following the intensity of recent geopolitical developments, which, as has been pointed out, could disrupt global trade and prices.

Corporate lending is bucking the downward trend in household borrowing, with Greece ranking second among EU countries – after Lithuania – with the highest annual growth rate in corporate financing, according to ESRB data.

Based on July data, the rate of credit expansion stood at 10% at the end of July, compared with 3% a year ago and 8% cumulatively over the past three years. Two-thirds of the portfolio of Greek banks – 77.7 billion euros out of a total of 118.6 billion euros – now consists of loans to enterprises, and the average cost of financing is the average of the euro area countries, namely 5.8%, with a downward trend compared to a year ago.

The decline in housing loans comes despite a narrowing of bank spreads on housing loans to close to 1.5% at the end of July, down from more than 2% a year ago, and is related to high house prices, according to the ESRB data, with Greece among the countries with the highest increase in house prices. The increase in house prices over the last year is more than 10%, while over a three-year period it is more than 40%, making Greece one of the countries with the highest increase after Poland and Bulgaria.

Fonte: Ekathimerini | Author: Evgenia Tzortzi
Edition: Prime Yield