Greece’s mortgage credit market is expected to recovery along this year, after several year of very low levels of activity. The major banks forecast a 30% growth rate in the new credit concession in 2019.

This comes after a 20% rise in the demand of new mortgage last year, with banks granting €320 million to home purchase in 2018, a figure that compares with the €260 million in new mortgage credit granted in the previous year.

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% of the cost of the property acquired. The borrower’s contribution largely dictates the interest rate level, ranging from 4% to 5.5% for the purchase of a house, while for repair loans that are not secured against the property the rate ranges between 7% to 8%..

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 through the scheme, raising the total amount of new loans in the housing sector to €360 million.

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 will continue for at least the next 12 to 18 months.

In 2018 house sale prices rose 1.5% y-o-y in Greece. 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 real estate values is also set to offer borrowers additional incentives to refinance their mortgage loans, Moody’s estimated.

Original Story:Tornos News
Photo: FreeImages.com/Jonte Remos
Edition:Prime Yield