Aversion toward mortgages
Greece continues to have the worst performance in household credit, registering a consistently negative rate, which was -1.7% in January against a 0.3% increase in the eurozone, according to a report published on Thursday by DBRS Morningstar, focusing on the “slow production of new mortgage loans.”
The rise in interest rates and high inflation have made the growth rate of loans in the eurozone shrink, as it plunged from 4.5% in the first half of 2022 to a marginally positive rate in 2023. This contrasts with a steady contraction in Greece, due to large repayments exceeding new disbursements.
The aversion to borrowing by households is observed despite the fact that the vast majority of new mortgage disbursements in Greece are at fixed interest rates, which, through successive reductions made by Greek banks recently, have fallen to historic lows.
Fixed term rates start at 3% for a 3-year term, while last week Eurobank further reduced the 10-year fixed rate and above by 0.30 points, which starts at 4.10% and reaches 4.30% for periods of 15, 20, 25 and 30 years.
As DBRS observes, the high interest income of Greek banks, which increased by 51% year-on-year, is mainly linked to the strengthening of the portfolio of business loans, which grew by 5.1% in 2023, against an average increase of just 0.2% in the eurozone, despite stricter lending criteria, high interest rates and high repayments.
Interest income amounted to 8.1 billion euros at the end of 2023 compared to €5.4 billion in 2022 and according to DBRS this is mainly due to the overall better performance of the Greek economy, as well as the disbursement of loans linked to the country’s growth and the Recovery Fund funds, which “will continue to support the growth of the loan portfolio combined with some recovery foreseen for new mortgages.”
Fee income in 2023 was €1.8 billion compared to €1.7 billion in 2022, up 7%, driven by increased trading income, grant activity and sales growth activity investment and bancassurance products.
