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Banks’ decisive return to mortgage market may take time

By Nikos Roussanoglou

Property market professionals have sensed in the first three months of the year that banks would like to return to the housing credit market, while stressing the current obstacles, including the completion of the bank sector’s recapitalization. They add that the confusion over the capital gains tax on property is also proving a major headache.

What is not in doubt is the credit sector’s almost complete abstention from funding property transactions in recent years. Bank of Greece data show in that in 2013 no more than 17 percent of residential property transactions were completed with the contribution of bank loans. This had reached 82 percent back in early 2009. The average rate of loan contributions to house payments reached 35 percent last year, down from 70 percent in early 2009.

Theologos Bosdas, head of Engel & Volkers estate agents’ Greek branch, says that the recapitalization of the banking sector must be completed before banks’ emerging interest can turn into a dynamic return to mortgage credit. Furthermore, “the economy’s exit from the recession must be confirmed and the political and economic climate must stabilize before banks return to housing credit,” he noted.

Fitch stressed in a recent analysis that the local housing market will continue to be affected this year by the prolonged deleveraging of lenders in the context of the rationalization of their loan portfolios. This is why they are cannot really be expected to increase their new mortgage loan issues within 2014, even though they reached a historic low in 2013.

According to the Bank of Greece, household debt from mortgage and consumer loans dropped to 100.8 billion euros at the end of 2013 from 106.5 billion a year earlier. Mortgage loans came to 71 billion euros, falling 6 percent from 74.6 billion at end-2012. These figures confirm that banks placed emphasis almost exclusively on arranging previous loans last year, having produced revised payment plans for 250,000 mortgages that added up to 18 billion euros in recent years.

Of course for banks to start issuing more housing loans, demand in the market needs to pick up too.

ekathimerini.com , Sunday March 30, 2014 (21:19)  
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