Demand for loans remained at strong levels in November, data released by the Bank of Greece yesterday showed, as Greeks continued to take advantage of low interest rates to pile on the debt even as the State tightened its borrowing needs. Mortgage loans, one of the strongest sectors of growth, rose by 34.4 percent year-on-year in November and by 30.4 percent in the first 11 months of 2002. While the November growth rate represented a slowdown from a peak of 41 percent in April, it was still a strong double-digit increase. The strong pace of mortgage lending has kept the building boom going. Construction activity in the first nine months of 2002 rose by 8.9 percent in volume. Mortgage lending had been expected to see some easing following the massive surge in recent years, said Dimitrios Maroulis, Alpha Bank economist. «However, the pace of growth is still very strong as the household debt market is still in the infancy stage,» he said. The Greek mortgage-to-GDP ratio stands at 13 percent compared with 45 percent in other EU countries. Concerned by the rapid pace of credit expansion and the asset quality of the loans, BoG last week jacked up provisions for specific loans by 10 percent. Consumer credit expansion eased to 27.6 percent in November, the slowest pace in the last three years. While credit card borrowing slowed to 35.6 percent in November, down from 37.9 percent in the previous month, personal loans continued to sprint ahead, growing by 39.7 percent, the biggest rise in three years. Unlike the booming consumer credit market, companies have been more careful taking on debt, with corporate borrowing in November increasing by just 11.5 percent. «Geopolitical tension and the general air of uncertainties are forcing companies to put their investment plans on hold,» said Platon Monokroussos, economist at EFG Eurobank. Private sector credit expansion in November grew by 18.2 percent, offset by a 5.8 percent decline in government borrowing. Total credit growth remained unchanged at 6.8 percent, while in the first 11 months of 2002, it went up by 7.4 percent. Maroulis said the pace of growth in total credit expansion is at the same level as the projected increase in nominal GDP, suggesting that the sustained demand for loans is unlikely to stoke up inflation. While the catch-up process has still some way to go, the credit slowdown is expected to continue in the first quarter of the year. «We should see the trend persisting at this level at least in the first three months as a result of the general uncertainties and the central bank’s new loan provisions. Some sectors such as mortgage and consumer credit are expected to remain strong,» said Monokroussos.