From 2.70% to 3.30% – depending on the base rate – the upper limit on the basis of which variable rate mortgage after the decision to “freeze” announced banks. The cap was set at 0.20 (20 basis points) below the March 31 benchmark rate, maximizing the benefit to those who accepted floating rate loan until December 31, 2022. These interest rates are the base on which each bank applies its own spread, which varies by client and remains the same.

Thus, the total interest rate for each mortgage loan will be formed on the basis of the above interest rate, to which is added the appropriate margin provided for by the loan agreement, as well as the 0.12% installment prescribed by law. So they “freeze” them. interest rates mortgages at the level of March, and borrowers are protected from new interest rate hikes expected by the ECB in the near future.

The “freeze” applies to loans that bear interest on the basis of 1- or 3-month euribor, the ECB base rate and the saron (formerly Libor) rate, against which loans concluded in Swiss currency are valued. Judging by the announcements of banks, interest rates are “frozen”:

• At 2.70%-2.72% for loans pegged to 1-month Euribor, compared to 2.915%, which was the respective interest rate on 31 March.

• At 2.83%-2.85% for loans pegged to 3-month Euribor, from 3.038%, which was the respective interest rate at 31 March.

• At 3.30% for loans linked to the ECB’s key funding rate, from 3.50%, which was the corresponding rate on 31 March.

The main condition is to keep the loans up to date during the entire duration of the program.

• At 1.20% for saron (previously libor)-linked loans, from 1.4186%, which was the respective interest rate at 31 March.

As announced by Alpha, Ethniki, Eurobank and Piraeus, the incentive program, as it is called, applies to all mortgages of individuals who are aware, that is, those that are not in arrears with a reference date of April 2 for Eurobank. or April 28, 2023 for Alfa-Bank and the National Bank. This means that the program includes all confirmed loans that banks have in their portfolio, as well as those that have become known, that is, debtors will definitely repay the amounts due by a certain date set by each bank. It should be noted that the Eurobank also includes in the program all loans secured by housing, that is, including consumer loans. Also, the main condition is that these loans remain current during the 12 months of the program. Banks estimate that this is 500,000 loans that are in their portfolios, whether or not they are managed by servicers, with the cost to be fully borne by banks estimated to be around 200 million euros.

Finance Minister Christos Staikouras said the program “protects permanent households from possible future interest rate hikes and is expected to be joined by non-systemic banks and loan and receivables managers in addition to the four systemic banks.” The exact terms on the part of the servicers managing the €21.4bn mortgages on behalf of the funds will be determined within a week.

The “freeze” will take effect immediately from Piraeus Bank, whose clients will benefit from the May tranche, and according to the statement of the Eurobank, the benefit will be reflected in the June tranche. Those who are regular customers on the basis of the terms announced by the banks will join the program automatically, i.e. without any other action on their part, while they will be informed of the reduced interest rate on their loan and the corresponding installment through the copies of the invoices they receive regularly. According to the banks, if during the 12-month period of the program the base interest rates are reduced by central banks to levels below those stipulated in the program, then the lower interest rate will be applied in favor of customers. As Eurobank and Piraeus Bank explain in their statement, the program does not apply to fixed-rate mortgages or mortgages whose interest rate is set based on the base mortgage interest rate, as they were not affected by the increase in base interest rates that took place in during the last months.

The Consistent Borrower Reward Scheme is an extension of the Vulnerable Household Mortgage Payment Subsidy Scheme, which subsidizes a 50% monthly increase in mortgage payments with a starting date of June 30 and for 12 months. For a specific program, the availability period has been extended to July 31, 2023 (application date) and the first grants are expected to be made available in April. In this context, a ministerial decision is expected in the near future, which will increase the relevant criteria for income and assets by 30% (only for the purposes of a specific program), significantly expanding the circle of beneficiaries.