Greece’s interest rates top eurozone

The cost of money in Greece is the second highest in the eurozone for home loans with floating interest rates, according to data released yesterday by the European Central Bank (ECB). According to the survey, the cost of financing a property in Greece with a floating rate reaches 4.51 percent. The only country in the 12-nation bloc to have a higher charge than this is Germany, with 5.12 percent. The same loan in Luxembourg, Finland and France is offered below 4 percent, according to the ECB. In an economy that has been experiencing strong loan growth in the last few years, the high interest rates raise questions about the efficiency of the banking market despite its development in recent years. A series of rate hikes by the ECB so far this year have been largely passed on to loan holders, particularly those whose interest rates are not fixed. Some 80 percent of home loans in Greece have been obtained on a floating-rate basis. The banks, criticized for not fully passing on rate hikes to deposit products, have rejected accusations that they have adopted abusive practices against their customers. Banks argue the rate spread – the difference between the interest paid on deposits and that charged for loans – is larger in Greece than in other countries due to the small size of the local market and the country’s low credit rating.