Looking for a loan to buy a home in Greece? Credit conditions improve

Greek banks are expected to increase home loans issued by some 20 percent this year, helping support the real estate sector that had been starved of credit in recent years.

Banking sources said that the country’s leading four lenders – National Bank, Eurobank, Alpha Bank and Piraeus Bank – are expected this year to issue home loans ranging between 800 million euros to 1 billion euros, versus credit of 600 million euros that had been handed out in 2020.

As the country’s economy wrestled with billions of euros of bad loans left behind by its ten year economic crisis, banks had effectively shut off the lending tap to the sector since 2010.

The move starved the property sector of growth with demand mainly coming from investors seeking to buy a home to be used for short term rental, on platforms such as Airbnb, and foreign nationals picking up a house as means of securing residency via Greece’s Golden visa scheme. Those purchasing a home during these years mostly relied on their own funds.

Efforts, however, by lenders to offload problem loans through the sale of securitised loans have picked up in the last year or so, helping drew strong interest from local and foreign investors.

At the end of March, sour debt held by Greek lenders fell to some 47 billion euros, from about 70 billion euros about a year earlier. This amounts some 30 percent of loans issued and is twelve times higher than the respective ratio for eurozone banks, though Greek peers have committed to reduce the figure to single digits by the end of 2022.

As banks start to get on top of the problem with the help of rising deposits and a recovering economy, they have started to increase their focus on lending operations, such as financing mortgages.

Out of the debt now being provided for housing about 70 percent relate to home purchases with the remainder relating to property renovations, sources say.

Almost all (some 90 percent) of loans being issued right now have a fixed rate of interest for the duration of the loan, or for most of it, to help loan holders plan the family budget, bank officials add.