House extends foreclosures freeze

The House on Thursday voted to again extend a freeze on the repossession of certain categories of properties, despite warnings from the government and the banking industry not to.

The extension – the latest in a series since 2021 – will apply until the end of January 2023. The bill passed with 32 votes for, 12 against. All MPs bar those from ruling Disy were in favour.

The bill’s sponsors argued it will serve as relief to debtors amid the continuing financial fallout from the coronavirus pandemic and now from the conflict in Ukraine.

The moratorium on foreclosures applies to a debtor’s primary residence valued at €350,000 or less, business premises where the business’ annual turnover does not exceed €750,000, and parcels of land with a value of €100,000 or less.

Speaking on the House floor, Akel MP Stefanos Stefanou said that with the increase in base interest rates, banks are now raising loan instalments and hounding debtors.

Both the government and the Central Bank had warned against a new freeze on repossessions, saying it would undermine the island’s foreclosures framework and jeopardise the country’s sovereign credit rating.

They also cautioned it would encourage strategic defaulters and lead to an increase in the stock of non-performing loans, forcing banks to raise their capital provisions.

According to media reports, during the horsetrading and lobbying preceding the vote in the House, the association of credit management companies sent a letter to MPs promising to desist until the end of February on foreclosing on any properties worth up to €350,000 belonging to individuals and households classed as financially vulnerable.