The Co-operative Central Bank will lower interest rates on all mortgages being serviced by one per cent as of March 1st, it announced on Friday.
The decision impacts positively some 34,000 households which have obtained housing loans from co-ops, which hold a share of over 40 per cent in the housing-loan market.
According to the CCB, non-performing housing loans will be subject to a 0.5 per cent interest rate decrease as soon as they are restructured, and a further 0.5 per cent once loan repayments resume as agreed.
CCB chairman Nicolas Hadjiyiannis described the decision as “very important” and said it was part of the organisation’s broader strategy.
“Quickly responding and fully aware of its sensitive role and its leading position in the local financial environment, the Co-operative movement has decided this measure along with a promise that the effort to lower interest rates will continue,” he said.
“It is our vision and goal, because our country needs it.”
The announcement comes one month after theCCB announced it was cutting its rates for agricultural loans by an average 2.0 per cent, in a bid to boost the sector as part of the effort for economic recovery.
Effective January 1, the CCB reduced the rate on loans to 4.75 per cent. It also cut the rate for non performing loans that are restructured to 5.75 per cent.
Provided the terms of the restructuring agreement were observed, after six months the rate would be further reduced to 4.75 per cent, the lender said.
Lending rate cuts will average 2.0 per cent for performing loans, the CCB said. They will affect around 8,500 loans.
The reductions on agricultural loan rates followed a similar move regarding student loans back in November.
All three moves are the result of long-term planning by the CCB for the gradual lowering of interest rates, aiming at enabling its customers meet their obligations and contribute to the recovery of the local economy.
As part of the island’s €10 billion international bailout, co-ops received €1.5 billion in taxpayers’ money to recapitalise.
The sector has been reduced in size through mergers, which saw the island’s 93 co-operatives merged into 18.