Another one "bomb" will finally undermine the budget of Greek households

The European Central Bank (ECB) intends to raise interest rates during the summer, and Greek banks are already preparing for the corresponding adjustments, which will be made in relation to both individuals and legal entities.

New loan payments add to the explosive mix of rising prices coupled with the energy crisis.
Existing and new borrowers with sliding and fixed rate loans will see a significant increase in monthly mortgage payments when the ECB announces an increase in interest rates in the summer. First The rate hike will take place in July, said the head of the European Central Bank, Christine Lagarde..

An increase in interest rates is considered necessary. However, many are confident that this move will lead to a recession and stagnation of inflation in the Old Continent.

The result for households and businesses will be explosive, because, combined with unstoppable price increases, the weak budget will be completely undermined, writes

With the first interest rate hike in July, the result will not be particularly burdensome for sliding rate borrowers, as they are now negative. However, this will affect those borrowers who apply for loans with fixed interest rates, since the first increase has already been approved. A few days ago, the management of Greek banks informed their branches of a 0.3% increase in fixed interest rates on new contracts.

Those who have already entered into the relevant loan agreements with fixed interest rates are protected and will not be affected by the increase in interest rates. However, in September, when the increase in interest rates is expected to change the sign of negative indicators to positive, everything changes dramatically. The average floating rate on mortgages is currently 2.50%, and the average stable over 10 years is about 3%. If the ECB announces a 50 basis point increase in interest rates, then we will have an increase of about 30 euros per month (installment loans with sliding interest rates).

The most “sad” in the examples

For example, floating interest rates on mortgages are around 2.4%. For a home loan of 100,000 euros, with floating interest for 15 years, the monthly payment is estimated at 670 euros. After the increase, the fee is 697 euros.

In the case of the fixed interest rate capital loan, also EUR 100,000 for a period of 15 years, and if today the average interest rate of new fixed interest rates is around 3%, the increase is expected to be higher, perhaps close to 100 basis points.

Thus, the conclusion of a new loan agreement for 100,000 euros, for a period of 15 years, which currently has an average fixed interest rate of 3% and a monthly payment of 696 euros, will soon turn into 4%, with a monthly installment of 746 euros.

In other words, the increase in floating rate loan payments will deal another blow to the budget of Greek households.

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