Greek banker Theodoros Kalantonis, who has survived the worst of times in the past six years, said he can finally see the resurrection of home lending, in an exclusive interview at Bloomberg News Agency.
Next year “will be a turning point for the Greek mortgage market,” Kalantonis, executive general manager of retail products and non-performing loans at Alpha Bank A.E. (ALPHA), said. As he notes, Greeks now realize that prices will not fall any further and that therefore those eager to get a housing loan, but were hesitant in previous years, can now go to their bank.
Greece’s four largest banks plan to double mortgage lending this year and may do it again in 2015, according to Kalantonis. House loans in Greece plunged from a peak of 15 billion euros in 2007 to less than 250 million euros last year, he said.
In 2010, after Greece signed its first MoU with the troika of international lenders, the government froze foreclosures on homes with outstanding mortgage debt of 200,000 euros or less. The law also allowed homeowners who could afford to repay their mortgages to stop payments with impunity. “The government, under pressure to strengthen banks after receiving a total of 240 billion euros in aid, is forcing homeowners who can afford to pay their mortgage but choose not to, to go ahead and pay,” Kalantonis says.
The existing law protects first homes valued up to 200,000 euros if the borrower’s net annual family income is less than 35,000 euros a year. They also have to pay at least 10 percent of their net monthly income towards their mortgage.
“We see more foreclosures coming because it’s practically zero now,” Kalantonis said. “But we’ll only go after people in cases where we have strong evidence that they can pay, but have chosen not to.” From January 2015, banks will use a new industry-wide index to calculate what is left over from a borrower’s annual salary once cost of living is deducted.
The Greek mortgage market posted annual growth of 82 percent in the early 2000s. First-time homebuyers took advantage of easier financing and interest-rate reductions as the country joined the European currency.
“All this will be happening in a steadily improving macro-economic environment,” Kalantonis said. “Borrowers’ attitudes will change when they see there is light at the end of the tunnel and they will be more willing to renegotiate.” Greece’s four biggest banks aim to boost home lending to a total of 500 to 600 million euros this year, he added.