Reward for reliable debtors

Banks are being asked to subsidize 50% of the difference in mortgage installments resulting from the increase in interest rates as far as vulnerable mortgage borrowers are concerned. The government’s aim is to ease the burden on those borrowers who have been consistent with their loan obligations to date.

This was agreed to be examined during Thursday’s meeting between Finance Minister Christos Staikouras and the managers of Greek banks, who proposed this solution as a counterweight to the Spanish model that they rejected.

The measure provides that if a vulnerable mortgage borrower paid a monthly installment of 400 euros before the rise in interest rates, which after the rise increased to €500, the banks will cover 50% of this increase – i.e. €50.

The measure was proposed to be valid for 12 months and the details will be determined in the coming days in order to finalize the exact perimeter of the loans that will be subsidized.

The minister rejected the possibility of the state undertaking part of the subsidy and asked the banks for the submission within the next two weeks of a specific proposal for the program to support vulnerable borrowers who are consistent in their repayment, taking into account European supervisory rules, without budgetary costs.

According to banking sources, the number of vulnerable households to which the subsidy measure could be applied ranges between 20,000 and 30,000 and the cost is manageable. The condition is that the measure receives the approval of the European Central Bank, which according to estimates may request the reclassification of these loans from the category of serviced to the category of candidate loans for default. Even in that case, as competent sources explained, the cost would be low and the banks could bear it.

Staikouras also asked banks to submit by the end of the year their proposals in order to increase the approval rate of the requests through the out-of-court mechanism concerning borrowers who service their debts.