Filenews 21 December 2024
Bank of Cyprus and Hellenic Bank announced different measures yesterday, both focusing on housing loans for young couples, lower commissions for specific transactions, facilities for customers of specific age and vulnerable groups and the installation of new ATMs.
Following the political interventions of the last few days and the meeting of their CEOs with the President of the Republic, the two systemic banks announced yesterday relief measures concerning existing and new customers, with the following general characteristics:
- Bank of Cyprus' measures include interest rate reductions, rewards for consistent borrowers, new housing and business loans on favourable terms, as well as facilities for customers 18 and over and 65. The decisions will apply from 10/01/2025. Also, in cooperation with the government and JCC, a number of ATMs will be installed in selected rural areas (within the 1st quarter of '25).
- Hellenic Bank's measures include the installation of ATMs (implementation time will be needed), removal of specific charges to pensioners, free bills for young people, new housing products and interest rate reductions. The measures will be phased in, with full implementation by 31 January 2025.
The package for mortgages
- The Bank of Cyprus announced a subsidy of 1% of the interest rate on housing loans granted to beneficiaries of the government's housing subsidy scheme for young couples and/or young people up to 41 years old. The subsidy will be provided to loans with a fixed interest rate for 3 years (i.e. today from 3.60% for contribution >30% will go to 2.60% and for contribution <30% from 3.65% falls to 2.65%). It is understood that after the lapse of three years, the pricing will apply as agreed on the day of conclusion of the loan. It was also decided to subsidize the interest rate by 1% on housing loans granted to beneficiaries of the government's Housing Plan for the Revitalization of Mountainous, Peripheral and Disadvantaged Areas. The subsidy will be provided to loans at a fixed interest rate for 3 years (i.e. currently from 3.60% for contribution >30% to 2.60% and for contribution <30% from 3.65% to 2.65%). After three years, the pricing will apply as agreed on the day the loan is concluded.
- Mortgage loans of a total amount of €100 million for the acquisition of a first home worth up to €350 thousand. with a fixed interest rate from 2.85% to 2.90% (depending on the client's contribution) for 3 years. After three years, the pricing will apply as agreed on the day the loan is concluded.
- Bank of Cyprus proceeds with the granting of 5,000 business loans of up to €5,000 to small businesses at a preferential fixed interest rate of 3% for a period of 5 years for energy or digital upgrade purposes.
- Bank of Cyprus notes that with the upcoming reduction of the ECB's benchmark and Euribor interest rates, for every 1% interest rate reduction, the total reduction in interest for Bank of Cyprus customers will exceed €40 million. Annually
What did Hellenic announce about interest rates?
- Hellenic Bank will offer a new housing product, regardless of the amount, for a primary residence, with a fixed interest rate: 2.95% for 3 years and 3.10% for 5 years, with an additional reward of up to €2,000 for the purchase of household equipment.
- New housing product, which falls under the government's housing subsidy scheme for young couples and/or young people up to 41 years old, with an additional interest rate reduction of 0.45%, i.e. 2.50% for 3 years. Low base rate for existing and new floating rate loans linked to Hellenic Bank's main base rate, which currently stands at 1.91%. It is estimated that the downward path of interest rates will continue, which is expected to lead to further reductions in 2025.
Broader de-escalation
Both banks, in announcing the measures, did not fail to highlight the reduction of interest rates from December 18 for existing loans following the ECB's decisions to ease monetary policy.
As of June 2024, the overall reduction in the key ECB interest rate amounts to 1.35% (from 4.50% to 3.15%). As far as housing loans are concerned, more than 10,000 borrowers whose loans are linked to the ECB's key interest rate are seeing their instalments reduced immediately.
It is recalled that for months now, the interest rates of another 8,000 borrowers whose mortgages are linked to Euribor have begun to be reduced. Indicatively, the 6-month Euribor has gradually declined from 4.14% in October 2023 and is currently at 2.64%.
Hellenic Bank also recalls that the reduction of the benchmark interest rate on loans linked to the key interest rate for the ECB's main refinancing operations by 0.25%, from 3.40% to 3.15%, has entered into force on 18 December 2024. It is noted that this ECB interest rate was 4.50% from September 2023 until June 2024.
Reward with points or cash from Bank of Cyprus
The Bank of Cyprus will reward, within the framework of the scheme, borrowers who hold housing loans, with a variable interest rate based on the European Central Bank Base Rate (BEEKT) or the Euribor rate, which were given before 30 September 2022, on the basis of specific criteria.
The reward is equivalent to 0.5% on the interest rate for the period 30/06/24-31/12/24. In addition to the option to be rewarded through reward points, there will also be the option to provide the cash reward by crediting the customers' bank account (customers will be given a period of 15 days to choose how to provide the reward through the Mobile App).
Also, granting a personal loan of up to €5,000 at a favourable interest rate of 3% (fixed) for a period of 5 years to 5,000 consistent borrowers holding Bank of Cyprus mortgage loans for the purpose of energy upgrade of their home (e.g. installation of photovoltaic systems, equipment, etc.).
Charges and commissions from Hellenic
Hellenic Bank will provide free cash withdrawals and deposits at the bank's cash desks for all pensioners, as well as free remittances within Cyprus and Europe (SEPA transfers) for amounts up to €3,000 and simultaneous execution on the same day, also free of charge, through Online Banking and the Mobile App.
The bank also presents the free account maintenance for young people "My account 18-25", with a free debit card "Ocean Debit", free cash withdrawals in Euro from any ATMs worldwide, free travel insurance, participation in the "MPLE" card reward program, without conversion fees into foreign currency (up to €300 monthly) and with an option for a overdraft limit of up to €1,200.
It also introduces free basic account maintenance for citizens belonging to the category of Guaranteed Minimum Income (GNI) and gives a free chequebook to pensioners.
Bank of Cyprus fees and commissions policy
Bank of Cyprus will offer customers aged 65 and over free direct debit opening at the cashier, free cash withdrawals by debit card from an ATM free of charge from Bank of Cyprus (effective in the first quarter of 2025). Free cash withdrawals from the cashier for payment accounts with basic features.
Also, savings account – No Management Fees (for one account) Zero charges for paying utility bills either online or at checkout.
Free issuance of chequebook (comes into effect in the first quarter of 2025). In addition, a new Quick Account product in euro will be launched in the 1st quarter of 2025 through electronic channels, for young people aged 18 to 25.
The features of the product are: no administrative fees, free subscription to debit card in euro, free cash withdrawals in euro from ATMs internationally, free cash withdrawals in foreign currency from ATMs internationally and no foreign exchange charges for using the card in foreign currency. Bank of Cyprus states that it already has an 18-25 youth account with the following features: no administration fees, free subscription to a debit card in euros, free cash withdrawals in euros from ATMs internationally.
