KEDIPES on Tuesday announced it is moving forward with an interest subsidy for restructured credit facilities of customers that have the European Central Bank base rate as their base rate.
This is a first step towards absorbing the wider impact on the household budget from the escalating increases in the interest rate of the primary refinancing operations of the ECB caused by the sharp rise in inflation.
And it acts as a reward for borrowers who stick to the repayment schedule of their credit facilities for the year 2023, Philenews also reports.
The Cyprus Asset Management Company Ltd (KEDIPES) was established in 2018 as a private Limited Liability Company. It is a subsidiary of the Cooperative Asset Management Company Ltd (SEDIPES).
Tuesday’s disclosure was part of the announcement of KEDIPES’ financial results for the period ending in 2022.
Specifically, the interest subsidy on the accounts linked to the aforementioned credit facilities will be structured so that the total interest rate charged at the time of capitalization for the year 2023 will be equal to 3.50% for mortgage loans and 4% for credit facilities for other purposes.
Additionally, the accounts must not be in arrears on the capitalization dates specified in their contract (06/30/2023 and/or 12/31/2023) in order for them to be eligible for the subsidy.
It is clarified that crediting of interest to these accounts in no way constitutes an advance payment of an installment and does not change the borrowers’ obligation to adhere to their repayment schedule.
Philenews asked two of the island’s systemic banks – Bank of Cyprus and Hellenic Bank – whether they are also considering offering a similar subsidy.
The Bank of Cyprus said “this is not part of the bank’s plans at the moment” and Hellenic Bank said the majority of their loans are at a fixed rate and not Euribor.
For this reason, existing loans are not affected by the increase in interest rates and therefore “we have not had any particular requests for restructuring. Nevertheless, we are close to our customers and closely monitor developments.”