Filenews 29 July 2023
In the era of high interest rates, as borrowers have accounted for them differently, banks are trying to partially relieve their consistent customers who have a mortgage, secured by a first home worth up to €350,000, by offering a reduction in their interest rate or capping, following political intervention.
Today, the key ECB interest rate has risen to 4.25% and another 14.0% increase is expected on 25 September.
In practice, this means that on average the variable interest rate on mortgages has risen from 2.5% a year ago to 6.75% to 7%, skyrocketing monthly instalments.
"F" compiled all the programs offered by banks to relieve their customers and presented plans for loans linked to either the European Central Bank's base rate or Euribor.
A common feature of the plans is that in order to remain in the new pricing program, the mortgage loan should not experience installment delays during the program.
The "Reward"
Bank of Cyprus will reward approximately 17,000 consistent borrowers by activating its "reward" reward program and contributing €370 million. grades in the program.
Points can be redeemed in the network of businesses participating in the "Reward" scheme.
Customers of Hellenic, one of the largest retail banks, appear not to be affected by the ECB's increases.
More than 85% of mortgages are based on the bank's base rate, which is at lower levels, which is why, for the time being, no decisions have been made in relation to primary home loans.
Interest rate reductions
– Eurobank Cyprus has introduced a program and for the period from 1 June 2023 until May 2024 will reduce the final interest rate on housing loans that will be included in the program by 50 basis points (0.50%).
The reduction will be calculated at the end of each month and, at the end of the 12-month period of the program, the total amount of the reduction will be returned to customers by deposit to their current account.
The program will include all natural persons mortgage borrowers for the purchase or construction of a first home, regardless of the market value of the first residence.
– Alpha Bank Cyprus announced that on 1 August 2023 and for a period of 12 months (01.08.2023 – 31.07.2024) it is offering a reward program for consistent mortgage borrowers.
The variable base rate agreed in the relevant mortgage loan agreement, as set at 31 March 2023, will be capped at 20 basis points (0.20%).
The above-mentioned ceiling on the variable base rate will remain constant throughout the duration of the programme.
– Astrobank proceeded with a program concerning housing loans for primary residences. The program is valid from June 1, 2023 until the end of 2023 and will provide for the "freezing" of the key interest rate at 2.75%.
– National Bank (Cyprus) provides facilitation to private customers with residential loans for owner-occupied housing, which were performing on 31/05/2023 and which carry a variable interest rate linked to Euribor or to the base rate of the European Central Bank, after the expiration of 12 months from 01/06/2023, in the form of "Cash-Back", so that the amount that will result from the difference of any increase in the reference rate of the aforementioned loans based on the accounting of 31/05/2023 in relation to the current value of the reference rate every end of the month and until 31/05/2024, thus providing protection against any increases until 31/05/2024.
The plan of KEDIPES
KEDIPES offers borrowers two options for pricing new restructured loans. The first option is to introduce a fixed rate period, which will expire on 31/12/2025.
For the period from the conclusion of the relevant agreement and until 31/12/2025, they will bear a fixed interest rate as follows: Restructuring in relation to housing loans 3.50% and restructurings in relation to credit facilities of other purposes 4%.
The second option for a borrower in KEDIPES is, a fixed interest rate for the entire life of the restructured loan.
The fixed interest rate, which will apply for the entire duration of the restructured loan, will be 4.50% for housing loans and 5% for other loans.
