Red loans and real estate auctions in Greece

A reduction of EUR 53 billion in red loans is expected to be achieved by the Greek banks by 2021. Twenty-two lending and credit management companies still play a key role in this issue. These companies are expected to manage more than 80 billion euros in non-performing loans for households and businesses in the coming years.

Four system banks are expected to securitize (securitization – the financing of certain assets by issuing securities) or sell 32 billion euros in non-performing loans by the end of 2021. These NPL will be gradually sold to the management companies, with which debtors will have to deal.

According to the Minister of Finance statement, Mr. Christos Staikouras, he has sent a letter to the Greek Union of Banks asking for the consumer, mortgage, and business credits regulation, in accordance with the basic law 4605/2019 on the protection of the primary residence.

  • If borrowers meet the requirements of the law 4605/2019, they can submit an electronic application on a special platform. The application will be reviewed with the participation of the bank. Depending on the age of an applicant, a new repayment period will be determined. The interest rates “trim” will depend on the balance and the ratio of debt to the real estate value. The monthly loan fee will be reduced by 30%, however, debtors are obligated to make their payments on time.
  • If they do not meet these legal requirements they must seek a bilateral settlement with the bank.

Banks have urged their borrowers to use a special online platform to repay their loans so as to protect their property. However, despite the fact that the new law offers significant operational and substantial benefits, only a few borrowers have taken advantage of it, according to the data collected so far. Banks provide their clients with a lot of different solutions:

  • extended loan repayment period
  • a significant reduction in interest rates
  • low startup programs with a three-year increase
  • plans to reduce debt to property value by collecting it

50,000 auctions by the end of the year

Stock and managing companies entry in the red credit market is now a matter of course. It has become clear now that the policy of the previous years, which has been focusing on preventing auctions, will become a thing of the past in May 2020.

Borrowers, whose loans have already been sold to funds and management companies, should know that soon they will face more unpleasant terms for settling their obligations. Although banks have not started mass auctions yet, their number is currently increasing on the online auction platforms. At the same time, asset acquisition management companies have announced dozens of auctions.

It is important to mention that after the negotiations with institutions, it has been planned to hold about 50.000 auctions by 2021. It is a really large number, especially considering that in 2019 the number of auctions reached only 29,109. Since 2020 almost 1.419 houses, plots, stores, factories, and other types of real estate properties have gone under the hammer and 3.370 more auctions are expected to be held by June.

Real estate auctions in Greece provide a unique opportunity to purchase a real estate property at a non-market price. However, careful examination of the object, thorough analysis of its potential profitability, as well as of the tendencies in the real estate market, are required to seize this opportunity. DKG Development’s highly qualified specialists are ready to undertake these responsibilities. They will help you with any aspect of real estate investments.