Local mortgage market grinding to a halt
The mortgage market in Greece is registering consecutive negative records, with Greece appearing as the only country in the European Union in negative territory on housing credit for the last three years.
Given that the decline in mortgage lending extends beyond the last three years due to the previous financial crisis, it becomes clear that mortgages are the major problem in the banking system, despite the fact that funding costs and interest rates for the housing market have fallen to the average European level.
Average interest rates in this country stand at 4%, following a downward trend compared to a year ago and are comparable to the average European level, but nevertheless the rate of annual financing was at -2% at the end of July against -3 % a year ago and -2% in the total of the last three years.
This follows from the report published by the European Systemic Risk Board (ESRB), warning about the financial stability in the eurozone after the intensity of geopolitical developments recently, which can, as pointed out, disrupt global trade and prices of the goods.
Corporate lending is moving against the downward trend of household borrowing, with Greece, according to ESRB data, ranking second among EU countries – after Lithuania – with the highest annual growth rate of corporate financing.
Based on July data, the rate of credit expansion stood at 10% at the end of July, compared to 3% a year ago and 8% cumulatively over the past three years. Now two thirds of the portfolio of Greek banks – 77.7 billion euros out of a total of €118.6 billion – comprises loans to companies and the average cost of financing is the average of the eurozone countries, namely 5.8%, with a downward trend compared to a year ago.
The decline in housing credit comes despite banks’ home loan spreads narrowing to near 1.5% at the end of July, from more than 2% a year ago, and according to ESRB data it is linked to high real estate prices, with Greece being among the countries with the highest increase in house prices. The rise in housing rates in the last year has exceeded 10%, while over a three-year period it is over 40%, ranking Greece among the countries with the highest increase after Poland and Bulgaria.
