Fixed rate for 80% of mortgages as demand increases
New home loans jumped 40% last year, indicating similar growth in mortgage credit this year as well.
Data from Kathimerini shows the mortgage market soared to €930 million in 2021 from €660 million in 2020, while estimates for 2022 put new issuance at around €1.2 billion.
The surge in demand is reflected in the number of home loan applications, which according to broad market data stood at 60,000 last year, up from 42,000 in 2020, to signal the sharp recovery in the market after years of stagnation.
According to relevant banking officials, the timing of both the decision to buy a home and the financing of the purchase with a loan is exceptionally favorable for a number of reasons:
* Low long-term interest rates – notably fixed rates – which are at historically low levels.
* Property prices which, despite the recovery seen over the past two years, remain below 2019 levels and remain affordable for the average household.
*Rising rental rates, which means that a mortgage tranche may very well be lower than the average monthly rent.
* Tax incentives for the purchase of housing such as tax exemption for the parental concession and donations up to €800,000, the reduction of the single property tax (ENFIA), incentives for energy renovation, etc.
According to Piraeus Bank Executive Director General Vasileios Koutentakis, “low long-term interest rates for mortgages, especially fixed rates, reinforce the idea that borrowing to buy a house might make more sense. financially than to rent”.
The preference for fixed rates was clearly reflected in last year’s issuance which, according to the National Bank’s deputy managing director, Pantelis Maraveas, “concerned about 80% of all new mortgages, the 10-year rate starting at just 2.8%. Combined with a long-term loan, up to 40 years, offered by the bank, it leads to a particularly low monthly payment.
The option of a fixed rate is favorable for borrowers since rates are at historically low levels, so it now makes sense to enter into such a contract.