ECONOMY

Lenders reducing credit flow

Loan growth in Greece slowed in January with banks keeping a tight grip on credit as the country’s recession appears deeper than initially thought. Bank of Greece data released yesterday showed that credit expansion in January decelerated to 3.8 percent year-on-year from 4.2 percent in the previous month. Greek households and businesses owed a total of 253.9 billion euros, rising slightly from 253.4 billion a month earlier. The number of new mortgages being registered remained low but steady. Data showed that new home loans rose 3.6 percent to 80.7 billion euros versus an annual 3.7 percent pace in December. Industry sources said last week that some lenders are rejecting about 80 percent of loan applications in categories such as consumer credit, fearing that customers will not be able to pay back money due to the economic downturn. Greek GDP contracted by 2 percent in 2009, worse than the government’s 1.2 percent estimate, making it the steepest recession in nearly 30 years.