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New home loans scheme announced by Housing Finance Corporation

The Housing Finance Corporation (HFC) on Tuesday unveiled its new housing loans scheme, primarily targeted at young couples and providing long-term loans of up to €450,000.

“It is an attractive product, perhaps one of the best now in the market,” HFC chairman Loizos Papacharalambous said during a news conference.

Applications for the scheme, dubbed ‘Pame Spiti’ (Let’s Go Home) can be filed by December 31 this year.

The loans relate to buying, building, completing a house or making extensions to a residence.

The HFC will grant loans of up to €450,000 with a repayment period up to 40 years and with floating interest rates between 2.60 per cent and 3.00 per cent, Papacharalambous said.

The scheme also covers applications for renovation works and energy efficiency improvements to homes, with loans up to €60,000 and a repayment period up to 15 years and with rates from 3.30 per cent.

The novel aspects of the plan include raising the loan limit to €450,000 from €200,000, financing for another home beyond the primary residence, and the possibility – under certain circumstances – of transferring mortgages to the HFC from another lender.

“We believe it is a very good product which will be helpful to young people who want their own roof over their heads, but also to society in general which is experiencing difficult times,” the HFC chairman noted.

According to Papacharalambous, the fundamentals of the HFC remain sound, despite a slight increase in non-performing loans, now at 41.5 per cent. Back in June of 2015, NPLs accounted for 36 to 38 per cent of the organisation’s loan portfolio.

The HFC is engaging in “intensive efforts” with customers in a bid to restructure loans in arrears.

At the same time the HFC has a capital adequacy of 19.5 per cent, and its liquidity ratio currently stands at 31 per cent.

“This allows us to grant loans at lower interest rates than before, the purpose being to get the housing market moving again,” said Papacharalambous.

The HFC was established by the state in the early 1980s to facilitate access to mortgages, particularly to vulnerable groups. It grants loans to families to obtain their first home and to low-income groups on favourable terms.

The HFC holds assets worth €1.1bn, although total assets – counting also the loans managed on behalf of the state and the Central Agency for Equal Distribution of Burdens – come to €1.6bn.

Over the years, the organisation has offered home loans to some 33,000 households, of a total value of €2.2bn.

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