Greeks snap up loans
Greek households snapped up home and consumer loans at a fast pace in the first two months of 2006 as credit growth jumped by about a third, according to Bank of Greece (BoG) data released yesterday, while more than 60,000 loan holders are struggling under the weight of their debts. The BoG, the country’s central bank, said in a report that at the end of February, Greeks owed financial institutions 71.3 billion euros, 30 percent more than in the same period a year earlier. Mortgages shot up 33.6 percent, in comparison with the same period a year earlier, reaching 47 billion euros. Consumer credit also grew strongly, rising by 28 percent to 22.6 billion euros. The BoG has repeatedly called on banks to be more stringent in issuing loans as signs appear that Greek households are starting to have problems in paying money back to lenders. Loan growth in Greece has remained strong despite widespread expectations of a slowdown at the start of 2006. The introduction of tax on newly built homes and higher tax values on real estate has done little to dampen the buying appetite of homeowners. The central bank also pointed out yesterday that the European Central Bank’s rising interest rate trend has not had a negative impact on local property prices. The 60,000 loan holders that are having repayment problems have delayed those payments for more than three months and owe a total of 3.3 billion euros, the BoG added. About 6.3 percent of Greek households delayed their loan payments in 2005 while the respective figure in the 12-member eurozone is a lower 3.6 percent. About half of the delayed repayments on loans come from Greeks who have taken out a mortgage, while the remaining delayed repayments are from households that have consumer loans.
