The subsidy on loans guaranteed by the borrower’s principal residence, provided through the “Gefyra 1” program of the Ministry of Finance, has been extended by three months, but reduced to about half of the initial amount.
The Gefyra 1 program subsidizes nine monthly installments payable by more than 74,000 borrowers affected by the pandemic. The measure was introduced at the end of August 2020 with an inclusion deadline at the end of December 2020. It was due to expire at the end of September 2021 for everyone, but the measure has now been extended for another three months, until the end of this year.
The provision, announced by Prime Minister Kyriakos Mitsotakis earlier this month in Thessaloniki, has been agreed with the country’s creditors and is expected to be tabled in parliament in the coming days.
Sources say the regulation to be submitted will provide for a state subsidy of 40% of each monthly payment for another three months of in-service installment loans. Until the end of September, the subsidy ranged from 90% in the first trimester to 70% in the third; similarly, the state subsidy for bad debts will amount to 35% of each tranche, after increasing from 80% in the first quarter to 60% in the third. As for loans that banks had terminated, the subsidy will rise to 20%, after varying from 60% of each tranche in the first quarter to 30% in the third quarter.
Gefyra 1 has so far provided substantial support to households, having also helped banks in their efforts to restructure the debts of borrowers who have suffered problems due to the health crisis caused by the pandemic, and even bad debts.
Inclusion in the program requires borrowers to continue paying the entire monthly installment after the grant period expires.
Based on the latest figures from the Ministry of Finance, by the end of September, when 90% of the tranches of the Gefyra 1 program grants have been completed, the government will have disbursed some 230 million euros. This leaves an additional 70 million euros to spend on the initial budget of 300 million euros, which will cover the remaining three months.