The economic crisis that the country went through in the past decade casts a heavy shadow on the decisions of households over whether to resort to bank loans to buy a house. Combined with the upward trend in interest rates, it prevents a large number of potential borrowers from crossing the threshold of banks to apply for a loan.
This is confirmed by an Alpha Bank study on the housing issue in the country, according to which high interest rates and the fear of risk are the main deterrent factors for those who state that they do not intend to finance the purchase of a house with a mortgage.
Specifically, one in two respondents cites high interest rates and, as Alpha observes, “the stricter financing conditions that lead to higher debt servicing costs are the main deterrent factor for potential borrowers.”
Furthermore, 41% of respondents in this sample consider fear of risk to be a key factor in not applying for a mortgage. Fear of risk is linked to uncertainty about possible adverse events, such as future job losses or an unexpected increase in interest rates, negatively affecting households’ ability to service their debt in the future.
As Alpha Bank observes, “it seems reasonable to assume that these concerns have increased significantly since the global financial crisis of 2008, especially in countries such as Greece, where the effects were particularly severe. This is largely due to the fact that the majority of people have experienced such events at some point in their lives. As a result, fear of risk has become embedded in the collective memory.”
These findings coincide with the banks’ findings from the course of applications for the “My Home” program, which show massive interest, with the main attraction being the cost of the loan based on a 50% interest rate subsidy. It should be noted that the final interest rate applicable to “My Home II” is determined based on Euribor and the margin applied by the bank. This margin ranges between 1.5% to 1.7% – depending on each lender’s policy.
Original Story: Ekathimerini | Author: Evgenia Tzortzi
Edition: Prime Yield