Mitsotakis Wants Mortgage Rate Cuts for Paying Homeowners

FILE - ND leader Kyriakos Mitsotakis during his meeting with the members of his shadow cabinet on Tuesday, Feb. 5, 2019. (Photo by Eurokinissi/Yorgos Kontarinis)

ATHENS – With the ruling Radical Left SYRIZA working on a plan to protect some homeowners from having their primary residences seized by banks for being unable to pay their mortgages, major opposition New Democracy leader Kyriakos Mitsotakis wants people who are paying to get a discount on their interest rates.

Leading big in polls with elections coming this year, Mitsotakis said Greece’s four major systemic banks should give paying customers keeping up to date on their mortgages a cut in what they pay because the SYRIZA plan would subsidized up to one-third the monthly payments of those who aren’t.

His proposal to banks’ CEOs was for a reasonable reduction of the interest rate on mortgages held by dependable lenders for conscientious borrowers, with the framework of criteria to agreed to by the government and the Hellenic Bank Association (HBA) the business newspaper Naftemporiki said.

“We fully acknowledge the need for a framework of protection to exist for those (borrowers) that are truly in need, but we also want to discuss with you, how and in what manner to reward the borrowers, who amid the crisis and with great pain, were able to remain consistent vis-a-vis their obligations towards banks,” said Mitsotakis.

He said that would also help banks reduce a mountain of bad loans making up 40 percent of their portfolios with many people unable to pay because of repeated pay cuts, tax hikes, slashed pensions and worker firings and ongoing austerity measures continued by SYRIZA.

His unprecedented proposal, by Greek standards, came during a meeting with the heads of the country’s systemic banks (National, Eurobank, Piraeus and Alpha) and the leadership of the HBA, the paper said.

That was held after the government and the lenders agreed in principle to set up a legal framework to protect private residences from creditors with the current scheme due to end and Prime Minister Alexis Tsipras, who once swore “not one home in the hands of banks,” reneging on his promises to protect homeowners from foreclosures and confiscations.

Greece plans to pump as much as 1 billion euros ($1.1 billion) into its banks over the next five years by subsidizing a part of households’ mortgage repayments, the financial news agency Bloomberg said, as Tsipras is trying to counter the fallout with elections coming.

Under the plan, some households unable to repay their home loans will restructure their debts with the banks, with the state then paying part of the remaining monthly installments, the news agency said, citing three sources it didn’t identify.

Greece’s four largest banks are buried under some 88.6 billion euros ($100.37 billion) of bad loans and with a government official warning they would need another injection of state funds despite a previous 50-billion euro ($56.64 billion) bailout.