Increase in fixed mortgage interest rates
Piraeus Bank and National Bank have raised their fixed mortgage interest rates by 0.7 and 0.5 percentage points respectively, following the general trend in the market for readjustments in long-term fixed interest rates, which was launched the previous month by both Alpha Bank and Eurobank.
In addition to the increased fixed interest rates, banks are considering reintroducing the early repayment penalty, as an offset to the high cost of locking in the interest rate for long periods based on interest rate swaps. Eurobank has already done so and according to information other banks are considering to do likewise.
Following the hikes, Piraeus Bank’s new fixed interest rates start at 4.05% and go up to 5.05% (from 3.35% to 4.80% previously) for fixed terms of three to 30 years. After the end of the fixed term, the loan is amortized with a variable interest rate based on Euribor, to which is added the bank’s interest rate, which starts according to the new Piraeus tariff, from 2.45% and reaching up to 3.20% (from 2.65-3.75% that applied recently). Thus, the increase in fixed interest rates announced by Piraeus Bank is combined with a decrease in the spreads of floating interest rates, while the reference basis is the 1-month Euribor, which currently stands at 1.4%.
National’s new fixed interest rates start – depending on the customer’s profile – from 3.80% or 4.20% (from 3.30% or 3.70% before) for a duration of 10 years and reach up to 4.60% or 4.90% (from 4.10% or 4.40% before) for a term of 30 years. After the end of the fixed term, the loan is amortized at a variable interest rate based on the 3-month Euribor (currently 1.8%) plus a margin that starts at 3.30% and reaches up to 3.75%.
The new tariff announced by National foresees small increases of 15-20 basis points in the interest rates of term deposits for individuals, while the increases in the interest rates of term deposits for businesses are slightly higher. On the mortgage front, it was preceded by increases of 0.40 percentage points last month from Alpha Bank, taking its 5-year fixed rate to 3.60% with a step up to 4.40% for a 20-year fixed.
In the case of Eurobank, the increase implemented last month on fixed interest rates was 50 basis points, raising them to 3.10-4.70%.
