Are Greeks heavily in debt or not? According to data from the Bank of Greece, the annual growth rate of lending to the private sector remains high by Greek standards. Private sector debt stood at 28.2 billion euros at the end of August, about equal to the balances of mortgage and consumer loans. Mortgages amounted to 19.2 billion euros, up 39.3 percent year-on-year in September. The balance of lending for consumption – with personal loans up to 3,000 euros, consumer loans up to 25,000 euros and credit cards – totaled 8.9 billion euros, up 30.6 percent year-on-year. It is a fact that mortgage and consumer lending in Greece stands at about 50 percent of the European Union average. For this reason banks consider the market to still have a large potential for growth. However, banks also know that a segment of the public – overwhelmingly those at low-income levels – are already heavily in debt, having taken out more than two or three personal loans, many of which were for holiday spending. There are many cases of people even having a dozen personal loans, which are then «recycled» for the initial loans to be repaid. Such loans are usually preferred by people earning between 900 and 1,000 euros a month. By contrast, a family with a monthly salary of 3,000 euros generally prefers to use credit cards. The situation is different as regards mortgages. Mortgage holders are much more careful, particularly as Greeks are strong believers in homeownership. In recent years, the average size of mortgages has risen considerably, mainly due to a steep rise in property prices, combined with an even sharper fall in interest rates. A worrying sign is that the jump in the average size of loans has not been accompanied by any commensurate rise in incomes, which means either that the duration of loans has been lengthened or that the cost of repayment represents a higher percentage of total income (at the expense of other obligations), or a combination of the two. According to unofficial data, most mortgage-holders, owing 120,000 euros or more, belong to the middle or higher income brackets and are those who keep property prices at high levels with their preference for upmarket areas. Particularly for first-time home buyers, the benefit of exempting interest payments from taxable income is considerable. The provisions of the new tax bill are projected to restrict such big mortgages, but experts have expressed the view that any bursting of the property market bubble will only come after 2004.