Home purchases rise, new mortgages fall

Portfolio declined by 0.9% in Q1 2024 and by 3.1% year-on-year in Q2 of the current year mortgage loans four systemic banks, as a result of high repayment levels exceeding the issuance of new loans.

According to relevant data, the current portfolio banks decreased to €25.5 billion from €25.7 billion at the end of Q1 2024 and from €27.7 billion in Q2 2023. The portfolio contraction is observed in all banks, despite the stimulating effect of the My Home program: portfolio Alfa-bank amounts to 5.75 billion euros, Eurobank – 7.16 billion euros, National Bank – 6.47 billion euros, and Piraeus Bank – 6.13 billion euros.

Purchasing real estate with the help of a loan is only a small part shoppingregistered in the country, the total number of which in 2023 amounted to 174,475 properties, compared to 144,053 in 2022 (an increase of 21.1%). Over the same period, the number of loan agreements for the purchase or construction of housing amounted to 14,621, and the volume of new payments was 1 billion euros.

According to bank data for the first half of 2024, the volume of new payments amounted to 550 million euros, with another 380 million euros issued within the framework of programs “My Home”. These were applications that had already been approved since 2023, bringing the total disbursement for the first half of the year to €930 million. However, excluding disbursements under the My Home program, the volume of new loans issued by banks in the first half of the year is slightly lower than in the first half of 2023, when it reached €570 million.

Competent officials connect low demand with expectations raised by government announcements about expanding the program “My home”as a significant portion of potential buyers are awaiting the specifics of the new program to understand whether they will be able to benefit from the subsidy and make a final decision. However, the main deterrent is rising house prices, which rose 10.4% year-on-year, according to the Bank of Greece.

This growth complements the 13.8% increase recorded in 2023, leaving house prices just 4.1% below the all-time high recorded before the 2008 financial crisis. Notably, prices have risen 66.4% from the low recorded in the third quarter of 2017.

In an effort to attract the interest of potential buyers to buy a home, banks are promoting special programs for young people aged 40 and over, which provide fast pre-approval procedures, preferential interest rates and offers on loan expenses such as document approval fees or one-time legal and technical inspection costs, as well as additional liquidity in the form of personal loans to cover installation costs.

Mortgage rates with a fixed rate are beginning from 2.50% for a 3-year term and up to 4.90% for long terms of up to 30 years, which gives hope for lower interest rates. Fixed rates compete with variable rates, which, although they are trending downwards due to the fall in the Euribor, currently at 3.5%, are burdened by an average spread margin of close to 2%.

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