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Finance minister to look into expanding mortgage relief scheme

Finance Minister Constantinos Petrides has been tasked by the cabinet to draft a plan aimed at borrowers who were rejected by a state-backed mortgage relief scheme after their loans had been deemed unviable, it was announced on Wednesday.

The new scheme could involve a higher debt write-down, or a higher contribution by the state, or a combination, so that vulnerable borrowers can protect their primary residence, deputy government spokesman Panayiotis Sentonas said.

“Today’s cabinet decision confirms the government decision to support borrowers who, despite meeting the basic criteria of the Estia scheme, could not be included because of failing the viability criterion,” Sentonas said.

The spokesman said the cabinet has asked Petrides to prepare a policy framework governing the implementation of a scheme to cover those categories of borrowers.

Through the Estia scheme, the state would pay 33 per cent of bad debts on primary residences, valued at below €300,000, on condition that the debtor would agree to make regular repayments to the bank.

It is understood that Bank of Cyprus has been working on a new Estia scheme exclusively for vulnerable borrowers.

The lender’s initial plans concerned its customers only but with the involvement of the finance ministry the blueprint will be expanded across the system to include all vulnerable borrowers rejected by the first scheme.

Those borrowers have little or no income and are on the state’s guaranteed minimum income. A lot are older, or single-parent families or people with serious illnesses.

 

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