EFG Eurobank, Alpha get set on mortgages

Competition in the mortgage lending market, already one of the most competitive segments in the banking industry, is set to intensify as two of the country’s major banks unveiled interest rate cuts and hikes for housing loans within the past week. Analysts said the latest rate adjustments are not expected to affect the sector’s profit margins, although they could pave the way for better credit spreads in the future. «The banks are making their products more competitive with no dramatic changes. This will not have much of an impact on long-term profits,» said Sofia Skourtis, bank analyst at Marfin Hellenic Securities. Following the lead of Alpha Bank, which surprised the market last week with higher rates for consumer loans and lower rates for some categories of mortgage loans, EFG Eurobank Ergasias yesterday announced more competitive rates for its EuroHome housing loans. The fixed interest rate for three years has been trimmed to 6 percent from 6.25 percent, while that for five years has been reduced to 6.30 percent from 6.45 percent. The fixed interest rate for two years, however, will go up to 4.90 percent from 4.70 percent. Fixed rates for the first year and for 10 years remain unchanged at 3.65 percent and 6.95 percent respectively. The floating interest rate also stays unchanged at 5.75 percent. Last week, Alpha Bank revised its three-year and five-year fixed rates to 6.10 percent and 6.30 percent respectively, lopping off between 20 to 40 basis points. It also increased consumer loan rates by 100 basis points to 11.50 percent. Falling interest rates in the last three years have sparked off a consumer credit boom that is still going strong. Bank of Greece statistics showed a 32 percent rise in consumer credit in the first six months of the year, an astounding increase when compared with single-digit growth in the eurozone. Despite a slowdown in household lending in the last year, analysts said there is still scope for ample growth in view of the low level of Greek household debt. Alpha Bank and Eurobank are estimated to each have a 10.5 percent share of the mortgage loan market against market leader National Bank’s 28 percent share.