Mortgage holders are hit hardest

After almost two years of battling with the pandemic, Greeks now also have to face the rising inflation and its effects on their budgets.

Hikes in energy prices have been passed onto almost all essential goods such as food, raising the cost of living by an estimated 7% from last year for a household with a monthly income of 1,500 euros, despite the subsidies the government is handing out.

The impact is greater for households with lower incomes, as the inflation tends to hit them harder than those with higher revenues, thereby aggravating inequalities.

However, those set to suffer the biggest setback from the growth of inflation are households servicing loans with floating interest rates. While most loan agreements are nowadays signed with fixed rates, the bulk of previous loan contracts, especially the mortgages issued during the construction boom in 2004-2008, had floating interest rates. Borrowers servicing those loans will face higher charges once the European Central Bank adjusts its policy.

As for the state, while it does enjoy higher revenues thanks to the rise in indirect tax revenues, it is also seeing the cost of borrowing rise.