Approval just takes too long, developers tell buyers seeking competitive loans from the Housing Finance Corporation

The state-owned Housing Finance Corporation (HFC, better known in Greek as Οργανισμός Χρηματοδοτήσεως Στέγης) was seen as a saving grace to the punishing property market. Offering subsidised interest rates at a fraction of those in commercial banks, the HFC aimed to make housing far more affordable for those in most need.

But in reality, the HFC’s mission has largely failed according to a number of loan applicants, agents and developers who spoke to the Cyprus Mail, painting a picture of horrific delays.

Waiting times have skyrocketed and applicants are experiencing anywhere from six to eight months to get their loan approved.

“None of the developers will sign a contract with someone who will take a loan from the HFC,” says Demetris Antoniou, a real estate agent with Sabbianco.

Agents also “discourage people from using HFC because we know the end result”.

Spike in demand

The HFC denies the accusations, saying it was designed as a small organisation but has seen a massive influx of interest, and is working hard to meet the demand.

Stakeholders however insist that the reputation of the HFC being incredibly slow has left its credibility across the housing market in tatters.

On the ground, agents and developers who hear interested buyers want to go through the HFC prefer to wait for someone else, or simply tell people to go commercial and then transfer their loan to HFC.

“Many developers hear HFC and just want to avoid selling it to someone who wants to go through there. There’s a lot of uncertainty. What if the developer waits eight months and then the loan doesn’t get approved?” said Kyriacos Kadis, director of Kadis estate agency.

“A developer having a delay in the payment they receive could delay the entire construction and affect all the other tenants in the apartment block.”

The same concerns were voiced by another two agents on condition of anonymity.

feature andria the housing finance coporation

General manager of the HFC Christoforos Kaplanis however rejects the criticism and says “this is the first time I hear of agents and developers saying such things.”

Kaplanis concedes that a loan application “takes longer” though he does not specify how much the average waiting time is, saying it is “some months” and “longer than it took two to three years ago”.

The crux of the problem lies in two areas: huge demand and not enough staff to meet it.

Indicatively, a €100,000 loan for 30 years at the HFC has an annual percentage rate (which includes interest rate) at 2.71 per cent.

A commercial bank may start at around 4.5 per cent and could easily go upwards of 6 per cent.

“With interest rates at a fraction of a commercial bank, of course people want to go to the HFC. Especially in the past few years with the cost-of-living crisis getting worse, the popularity of the HFC is growing,” Antoniou says.

HFC only for the better off?

Kaplanis affirms this, saying that in the past two to three years, demand has jumped. Responding to what is being said about the HFC on the market, he said he wanted the public to know that “we will do the best we can. Staff are working fervently and doing everything possible.”

Since April, another 19 people have been hired to help deal with the increased workload. Additionally, staff often work overtime to try and meet demand, he stresses.

“We are a small organisation. We cannot take on the banking needs of the entire country. No single bank can do this.”

Although the philosophy behind the HFC was aimed at helping primarily those less financially comfortable, the irony is now that the people who can afford to go through the HFC are those with enough money to pay developers the first instalments in cash.

Styliana Chrysa, whose name has been changed, has been waiting for eight months to get her loan approved.

“I am so frustrated, the developer is breathing down my neck and I don’t know what to do.”

No payment, no home

Chrysa was privileged enough to be able to pay the first instalment to the developer in cash, but the remaining instalments were supposed to come from the bank loan.

“It’s been two months that I was supposed to pay my latest instalment.”

She says that her developer is generally kind and understanding but his message is very simple and to the point: “if she doesn’t pay, she doesn’t get the apartment.”

Kaplanis says the HFC’s mission is to help those most in need and the staff is aware both of their financial duties but also “their social mission”.

As such, employees are incredibly dedicated and cases where the loan is urgent are prioritised, but he stresses no one can jump the queue.

Maria Procopiou (whose name has also been changed) bought a used apartment and said the owner had been calling her on a daily basis to ask about what was happening with the loan.

“It took exactly eight months but I got it in the end. I wasn’t going to budge. I can’t afford to go commercial.”

Procopiou was also ‘lucky’ in a sense that the apartment was being sold by someone that had been struggling to get rid of their flat and as such, she didn’t have much competition.

But she said the road to get there was unbelievably unacceptable. “I have a good contract so I was certain that I was going to get approved but why would the owner wait for anyone for this long?”

Tougher loan criteria

Chrysa also said she reached a point where after eight months of waiting, she filed a complaint – only to be notified it will take 90 days for this to be processed. The time limit could be extended if the complaints department requires it.

A survey carried out by the Central Bank published earlier this month revealed rising interest rates were suffocating potential buyers, leading to a decline in household loan applications.

Approvals for loans have become even tougher, with expectations of further tightening in the next quarter.

This includes far more thorough checks on applicants’ solvency, how they spend their income, and their job security and prospects. Overall terms and conditions have also gotten tougher, the report notes.

Kadis underscores something needs to be done urgently. “HFC needs to hire more staff and make sure the people that really need the help actually get it.”