ECONOMY

Fixed rate for 80% of mortgages, as demand rises

Fixed rate for 80% of mortgages, as demand rises

New housing loans jumped 40% last year, pointing to a similar growth in mortgage credit this year too.

Kathimerini data show that the mortgage market climbed to 930 million euros in 2021, against €660 million in 2020, while estimates for 2022 put new issues at around €1.2 billion.

The rise in demand is reflected in the number of housing loan applications, which according to data from the entire market amounted to 60,000 last year, against 42,000 in 2020, to signal the clear recovery of the market after years of stagnation.

According to competent bank officials, the moment both for the decision to buy a house and for the funding of the purchase through a loan is exceptionally favorable for a number of reasons:

* The low long-term interest rates – especially the fixed ones – that are at historic lows.

* The prices of properties that despite the recovery observed in the last couple of years remain below 2019 levels and remain affordable for the average household.

* The rise in rental rates, which means a mortgage tranche may well be lower than the average monthly rent.

* The tax incentives for buying a house, such as the tax exemption for parental concession and gifts up to €800,000, the reduction of the Single Property Tax (ENFIA), the energy upgrading incentives etc.

According to the executive general manager of Piraeus Bank, Vasileios Koutentakis, “the low long-term interest rates for mortgages, especially the fixed ones, are boosting the view that borrowing to buy a house could make more financial sense than renting.”

The preference for fixed rates was clearly reflected in last year’s issues, which according to National Bank Assistant General Manager Pantelis Maraveas “concerned about 80% of all new mortgages, with the 10-year rate starting from just 2.8%. Combined with a long-term loan, up to 40 years, that the bank is offering, it leads to a particularly low monthly installment.”

The option of a fixed rate is favorable for borrowers given that rates happen to be at record lows, so securing such a contract now makes sense.