Effort afoot to bridge gap on protection of debtors’ residences
The distance between the government and banks on the changes to the so-called Katseli law means their meeting on Monday at the prime minister’s office will be very important, while Athens is expected to forward its proposal on the protection of debtors’ primary residences to the country’s creditors on the same day.
The latest information suggests that the government has tempered its maximalist proposal as regards the degree of protection provided.
In view of upcoming elections the government had wanted to expand its protection catchment for borrowers’ main residences. As a result, the original proposal foresaw the protection of all main residences worth up to 150,000 euros and under certain conditions up to 250,000 euros, as well as expanding to people with commercial or professional activities. It would also concern not only mortgage loans but also corporate credit or debts.
However such a scenario had not appealed to the banks who feared that such measures would damage their capital adequacy and reverse plans for loan securitization.
The new proposal reportedly foresees protection for residences worth up to 100,000 euros who have an annual income of no more than 20,000 euros.
According to a study by PricewaterhouseCoopers on the system applied in Greece, Italy, Spain, Cyprus, Portugal, Germany and Ireland, it is only the first four countries that have some form of primary residence protection, with Greece’s being among the most generous.
