BANKING

Borrowers bracing for interest hikes

Borrowers bracing for interest hikes

Greek borrowers face the risk of interest rate hikes, which will raise the cost servicing debts to banks. At a time when the cost of living is going up due to the growth in energy rates and inflation, many debtors must also factor in the likely increase of their loan installments. 

The prospect of interest rate hikes in the eurozone is taken for granted, regardless of whether it happens in the summer, the fall or next year. This is a new reality borrowers must come to terms with, following years of low rates. Therefore the floating interest rates on loans, which have long been the allies of households and corporations, will now start to exert pressure.

Banking officials tell Kathimerini a large section of private sector loans has benefited from the negative Euribor rate since April 2015. They add that a small rise in interest rates at this stage should not really concern most mortgage holders, as a large part of them have already completed the period requiring interest payment and are now repaying the capital.

Greek mortgages are typically 20-year loans, with the first decade concerning mostly the payment of interest, while in the last five years interest accounts for up to 15% of dues.