The Bank of Greece (BoG) issued a press release informing the public it would be enacting a series of measures linked to loans and other credit for individuals secured by residential real estate.
The measures are aimed at preventing or mitigating systemic risks stemming from the real estate market in Greece and are associated with households and/or businesses lending secured by residential or commercial real estate.
The press release reads as follows:
The Bank of Greece enacted macroprudential measures for loans and other credit to natural persons secured by residential real estate
The Bank of Greece enacted macroprudential borrower-based measures for loans and other credit to natural persons secured by residential real estate located in Greece.
These measures are binding and take the form of caps on the debt-service-to-income at origination (DSTI-O) ratio and the loan-to-value at origination (LTV-O) ratio.
The measures will become applicable on 1 January 2025.
The Bank of Greece enacted macroprudential borrower-based measures (BBMs) for loans and other credit to natural persons secured by residential real estate (RRE) located in Greece by Executive Committee Act 227/1/08.03.2024 (Government Gazette B 1716, 15.03.2024).
These measures comprise:
a cap on the debt service-to-income ratio at origination (DSTI-O ratio) of 50% for first-time buyers and 40% for second and subsequent buyers, and
a cap on the loan-to-value ratio at origination (LTV-O ratio) of 90% for first-time buyers and 80% for second and subsequent buyers.
The abovementioned BBMs shall not apply to non-performing loans and forborne loans (within the meaning of Articles 47a and 47b, respectively, of Regulation (EU) No 575/2013 of the European Parliament and the Council), to loans and other credit disbursed under national housing policy or green transition programmes subject to specific terms and conditions (such as the “My Home” loan programme), as well as portfolios of re-performing loans purchased by credit institutions from NPL servicers licensed under Law 5072/2023.
Credit providers are allowed to exempt 10% of the total number of new loans approved and at least partially disbursed in each quarter from each of the abovementioned caps.
The power to introduce BBMs is conferred upon the Bank of Greece by means of Article 133A of Law 4261/2014.
Related information:
Macroprudential borrower-based measures: these measures mainly consist of caps on ratios relating to credit provision, borrowers or individual credit features. They are aimed at preventing or mitigating systemic risks stemming from the real estate market in Greece and are associated with lending to households and/or businesses secured by residential or commercial real estate. BBMs also help prevent excessive loosening of credit standards and strengthen the resilience of the financial system. These measures are complementary to other macroprudential measures used to address cyclical and structural systemic risks such as the Other Systemically Important Institutions buffer (O-SII buffer).
Debt service-to-income at origination (DSTI-O) ratio: the annual debt servicing costs of the total debt of the borrower divided by the borrower’s total annual disposable income at the time of loan/credit origination.
Loan-to-value at origination (LTV-O) ratio: the total amount of the loan or loan tranches secured by real estate property at the time of origination divided by the value of the real estate collateral at the time of origination.
First-time buyer: a borrower who has not been granted a loan or credit secured by residential real estate in the past.
More information on macroprudential policy can be found here.
Latest News
Developing the Blue Carbon Economy in Greece
Can Greece make money by protecting its marine environment?
EIB Appoints Greece’s Ioannis Tsakiris as New VP
Ioannis Tsakiris started the new role May 1 after spending 15 years at the European Investment Fund (EIF) and serving as Greece’s Deputy Minister for Development and Investments
Two Greek Beaches in Top 50 in the World
Both Greek beaches were on the list of the best beaches in Europe too
Eurostat: Greece 20th out of 26 European States in Hourly Average Wage
According to figures released by Eurostat, the Benelux Grand Duchy of Luxembourg, one of Europe’s hubs for finance, is in first place
Greek Property Renovation Surge amid Economic Constraints
This has led to a notable escalation in renovation costs, with average prices per square meter exceeding previous norms and reaching even 1,000 euros in premium locations
RRF: Additional €5.1bln Funds for Subsidies to Greece in 2025
By April 22, funds totaling 5.75 billion euros had been transferred for approved projects of the Recovery Fund to entities within and outside the general government and final recipients
OECD: Greek Economy Resilient with 2% Growth Forecast for 2024
However, the OECD highlights challenges including the need to enhance productivity and fiscal adjustment due to high debt levels.
Challenges and Delays in Greece’s Hydrocarbon Exploration
Sources disclose that the petroleum companies holding the concessions are seeking partners to jointly invest and share the costs of exploration and drilling.
Greek Beach Visitors Can Report Violations on New ‘MyCoast’ App
Greek authorities hope the newly-launched, free ‘MyCoast’ app will help clamp down on public beach violations
BoG Figures Confirm Banner Year for Greek Tourism in 2023
20.6 billion euros in related revenues topped the previous year’s figure by 16.5%