Directly connected to state action “My Home”through which an interest rate subsidy is provided for the acquisition of a principal residence with bank financing, has been the housing credit market for the last two years.
This follows from the tactics investigations by the Bank of Greecethe results of which show that the demand for new loans in the category fluctuates, depending on the course of the specific program.
The first cycle “My House”
Its first cycle started in April 2023, a development that had a catalytic effect on the number of applications submitted to banks.
According to the central bank, in the period January-March of last year there was a decline in demand, pending the start of the action.
However, these trends were completely reversed in the very next quarter, during which interest in new housing loans, as manifested by the requests submitted, increased.
From rise to fall
However, after the first wave of related applications, there followed a decline in demand, which the credit institutions reported to the Bank of Greece.
Thus, for two consecutive quarters, in the third and fourth of 2023, a decline in their number was recorded.
This is also linked to the increase in the cost of money, as the tightening of monetary policy by the ECB led to higher interest rates on housing loans.
Banks may have absorbed a large part of the burden and continued to have products with fixed interest rates below 4%, but uncertainty about the path of European intervention indicators, amid inflationary pressures, weighed on household sentiment.
This was followed by a six-month stabilization of applications (first and second quarters of 2024), while in the July-September period their number decreased again on a quarterly basis.
The beneficiaries of the “Spiti My” action
As banking sources point out, this development is linked both to seasonality, due to August which is traditionally a sluggish month, and to the announcement of the activation of a second cycle of the “My Home” action.
As it became known, at the beginning of the new year, the successful program will restart, with an expanded number of beneficiaries, ensuring 50% interest-free financing for the purchase of a home.
“The news has undoubtedly dampened demand for mortgages. And this is because many of those who meet the criteria of the program, postponed for a few months the submission of an application”, emphasizes the general manager of a systemic group.
The numbers of 2024
Despite the difficult environment for the development of housing credit, the performance of the banks moved within their forecasts during this year, which is estimated to close with new disbursements of around 1.2 billion euros, i.e. at the same levels as in 2023 .
According to the data of the Bank of Greece, in the eight months January – August 2024 the value of new contracts reached 880 million euros, marking an annual increase of 25%.
A banking source notes that this support is due to the fact that several months elapse between the date of application and the signing of a loan, especially in the case of the “My Home” program.
Thus, a large portion of this year’s production is work that had begun in 2023. Therefore, the rise in volumes this year is not indicative of prevailing trends.
The majority of transactions in the real estate market are still at least 70% financed by buyers’ equity.
Estimates for 2025
The same source believes, however, that from the beginning of the new year, the banks will be given the opportunity to significantly develop their operations.
And this for two reasons:
- First, the new state grant program will be launched, leading to a large wave of applications from those interested who meet the expanded criteria compared to last year’s action
- Secondly, the relaxation of monetary policy in the Eurozone will allow banks to proceed with significant cuts in their interest rates, a necessary condition for strengthening demand.
10-year record in grants
The relevant moves have already started, with the de-escalation of the annual cost of borrowing even below 3% through fixed-rate products for an initial period of up to 3 years, and will continue in the coming quarters, as European intervention indicators are reduced.
With this data, he estimates that 2025 will see a 10-year record in new mortgage lending, which could move close to the €2 billion zone, provided the macroeconomic environment is favorable.
Source: ot.gr
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