The new primary home protection framework, which is being prepared by the government, will apply to two-speed and three-criterion borrowers, according to information. The first category will concern those who will receive a loan arrangement and the latter those who will receive both a loan arrangement and a repayment subsidy from the Greek State. It is worth noting that both the property and income criteria are expected to be different to the inclusion thresholds. At the same time, a relative loan balance criterion is expected to be set for the first category, while the final text is expected to be ready within the next week.
Extension of up to 20 years and “haircut” of the capital
The new scheme will be based on the value of the loan in relation to the objective value of the primary residence, from which the attempt of a bank arrangement through a “haircut” (even of the capital) will begin. There will be the possibility of up to 20 years extension, while the adjustment rate will be between 2% -4%.
So the question is what is the value of the primary residence. It is worth noting that the main residence is currently protected by auctions, provided its objective value does not exceed 180,000 euros for an adult, which is increased depending on the marital status of the debtor to 220,000 for a couple, 240,000 for a family with one child, 260,000 for a family with two children and 280,000 for a family with three children. The Government’s aim is to set a single upper limit of between EUR 200,000 and EUR 250,000, to include all those who fall within. Consequently, the baseline scenario does not include scales. However, if the tiered scenario is selected, the government is discussing the reduction of the current limits of the law by EUR 30,000 each.
However, a residual loan balance is also expected to be set. The criterion to protect the primary home of a borrower will not only be the objective value but the balance of the loan as well. The government is reportedly seeking to apply an upper limit on the loan balance between EUR 120,000 and EUR 150,000.
There will also be an income threshold, and in the case of the selection of a single limit, it is expected to be set as an annual income close to 35,000 euros.
The limits of the subsidy
The second category of borrowers, with different inclusion criteria, is the one that will receive the so-called housing allowance. In this case, under certain terms and conditions, the State will subsidize the new installment amount. The monthly installment of the loan for vulnerable households will be subsidized by the State, at a rate that is estimated to be 1/3 of the amount, while for 2019 the total amount will be 160 million euros. There is however the possibility that another EUR 40 million could be secured, with the total amount reaching EUR 200 million.
There is no final decision regarding the criteria for joining the loan subsidy. However, it is worth recalling that in 2016 a provision was added to the Katseli law, which provided for the subsidy of the monthly installment, as this would be set by the court, by the State.
The Government subsidy is provided for when the objective value of the primary residence is between 120,000 and 220,000 euros, and increases depending on the marital status of the debtor./IBNA