In the next period, the arrangements of the banks’ plan will be made public in detail and it foresees the “freezing” for one year of the Euribor interest rate, on the basis of which the variable interest rates of housing loans are formed and has led to significant increases in the cost of borrowing in recent months. At the same time, it will also concern mortgage loans with variable interest rates, linked to the ECB’s intervention interest rate.
The “freezing” of interest rates will apply to all housing loans – including repair loans that were given additionally in some cases – regardless of whether it is a primary or secondary residence, which will be informed, while the support “frame” is being discussed to include which are in arrears up to 90 days, provided that the borrowers pay the amount due.
Thus, all floating rate mortgages, as well as those in Swiss francs, will be “converted” to a fixed rate for a period of 12 months. According to analysts, the European Central Bank (ECB) intends to proceed with two more interest rate increases, by 0.25 each or 50 basis points in total.
Based on the plan, the loan installments will remain at the levels that were raised until March, while double winners will be those who have the right to join the loan installment subsidy program that is already “running” by the banks. In addition, new criteria are adopted that allow more people to be subsidized.
The plan will take into account and strictly follow the supervisory rules set by SSM and the Competition Commission. The number of loans that will be affected by these new announcements, which are expected probably before Easter, according to converging bank estimates, is between 400,000-500,000 loans.
The submission of applications to the banks by young people and young couples for the granting of interest-free or low-interest loans has also begun
From Monday, April 3, the submission of applications to the banks by young people and new couples for the granting of interest-free or low-interest loans, with an interest rate corresponding to a quarter of the normal market interest rate, for the acquisition of a first home. Through the program, more than 10,000 beneficiaries can, within the year, acquire a private residence, with a monthly installment significantly lower than that corresponding to market mortgages, as 75% of the capital is granted by the Public Employment Service (PYPA) it is interest-free, while for those with three children and many children (and those who acquire this status during repayment) the loan is granted in its entirety without interest.
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**Interview with Dr. Sophia Michalopoulos, Economist and Financial Advisor**
**Host:** Welcome, Dr. Michalopoulos! Thank you for joining us today to discuss the recent news about the interest rate freeze and what it means for borrowers in our economy.
**Dr. Michalopoulos:** Thank you for having me! It’s a crucial topic given the current economic climate.
**Host:** Absolutely. First off, can you explain how the interest rate freeze will impact homeowners with variable rate mortgages?
**Dr. Michalopoulos:** Certainly! The freeze, set to last for one year, effectively means that homeowners will not see increases in their Euribor-based interest rates during this period. This is especially important as many have been facing rising costs due to fluctuations in interest rates. It will provide significant relief for those with floating-rate mortgages.
**Host:** That sounds like a welcome change. Are there specific categories of loans that will benefit from this freeze?
**Dr. Michalopoulos:** Yes, the freeze applies to all housing loans that are based on variable interest rates, including those tied to the European Central Bank’s intervention rates. This encompasses both primary and secondary residence loans and even repair loans that were granted in some cases. Additionally, there is discussion of including loans that are in arrears for up to 90 days, as long as borrowers continue to make their payments.
**Host:** What about those who have loans in Swiss francs? How does this freeze affect them?
**Dr. Michalopoulos:** Great question! Those with Swiss franc-denominated loans will also see their variable rates converted to fixed rates for the duration of the freeze. This aligns them with the broader effort to stabilize borrowing costs for homeowners.
**Host:** This seems like it might put some strain on banks. How are they expected to manage the implications of this freeze?
**Dr. Michalopoulos:** Indeed, banks will have to adjust their plans to accommodate this freeze. We can expect to see detailed arrangements come forth in the near future. They may also need to navigate new support frameworks for borrowers, especially those facing financial hardships.
**Host:** what broader economic effects might we see as a result of this interest rate freeze?
**Dr. Michalopoulos:** The freeze could help stimulate consumer confidence as borrowers no longer worry about rising interest costs. This can potentially lead to increased spending and investment. However, it will also be crucial to monitor how banks manage their balance sheets and respond to upcoming ECB rate cuts expected by the end of Q1 2024.
**Host:** Thank you, Dr. Michalopoulos, for your insights on this significant development. It’s clear that this interest rate freeze could provide much-needed relief to borrowers in the coming year.
**Dr. Michalopoulos:** Thank you for having me! It’s important to keep an eye on these changes and their potential impact on our economy.
