Interest rate freeze extended
Banks have already decided to extend the freezing of interest rates on housing loans, which was decided last May and expires in the same month of 2024.
The frozen interest rates at the level of 2.70%-2.80% plus the bank’s margin have facilitated the containment of installment servicing costs for approximately 450,000 mortgages with a total value of 19.5 billion euros and the extension of the program until the end of 2024 will keep mortgage installments at lower levels than the current ones, providing relief to households facing the increased cost of living.
The freeze will provide relief even if as expected the ECB starts reducing interest rates at the end of the first quarter of 2024, since given that the reductions will be gradual and controlled, the time for covering the difference will continue to count in favor of borrowers.
If the ECB interest rate, or correspondingly the Euribor on the basis of which most mortgages are priced, is brought to 3.50%, the benefit for borrowers translates into approximately 70 basis points and will be maintained until the ECB adjusts interest rates to the level of of reduced interest rates applied by the Greek banks – i.e. close to 2.80%.
