Retroactive mortgage subsidy
The mortgage subsidy that Greek banks are proposing for vulnerable households will be implemented retroactively, from July 2022, when the first European Central Bank rate hike took place, according to the proposal formally sent to the ECB’s Single Supervisory Mechanism.
The subsidy will start from January 2023 and will be valid until the end of 2023, also covering the interest rate increases that took place in the second half of 2022.
All vulnerable households that have serviced loans to banks – systemic and non-systemic – are entitled to a subsidy; that also applies to serviced loans of vulnerable borrowers that have been securitized and are owned by the funds. This possibility was proposed by the banks in order to ensure the equal treatment of all consistent borrowers and is subject to SSM approval, as long as it concerns loans that have been transferred to funds.
The subsidy will cover 50% of the increase in interest rates, which have to date been passed on to loan installments, as well as those that occur within the next 12 months. Therefore, as the banks have clarified, if the installment of a mortgage was 400 euros last June and has increased to €500 currently, the subsidy will be €50. If, based on the course of the Euribor rate, the tranche in the coming months reaches €560, the total subsidy will be €80.
The category of consistent borrowers includes those who have not delayed a loan payment for a period of longer than three months.
The mechanism for starting the payment of the subsidy will be accessed on the platform of the Gefyra (Bridge) program, operated by the Special Secretariat for Private Debt Management. Borrowers who meet the income and asset criteria to qualify as vulnerable will enter the platform that will be opened for this purpose and apply to receive the subsidy.
The subsidy amount will be credited to a special account. However, the installment they will pay to the bank will be that based on their loan agreement and will not be reduced. So it will be a subsidy in the form of a refund to the borrower’s account.
