Return of the loan-or-rental dilemma

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The dilemma between paying a monthly mortgage loan installment or renting rent that occupied hundreds of thousands of households in the 1990s and 2000s is re-emerging, albeit tentatively.

This question has arisen in the context of the gradual return of banks to the mortgage market and the recovery in buying interest, which has led to an increase in such transactions compared to a few years ago.

With rental and sales prices on the rise, potential buyers are asked to consider several factors.

There is no doubt, however, that the number of households dealing with this dilemma is far fewer than it was before the financial crisis.

According to the Bank of Greece, 85% of home sales in the 2000s were funded by mortgage loans. At the same time, transactions in the housing market ranged between 90,000 and 150,000 properties for most of the decade.

The data is very different today, with an estimated three in ten home sales financed by bank loans, which in part explains the reasons why transactions don’t exceed 25,000-35,000 annually.

However, anyone who decides on a loan and has it approved usually has to finance it with equity, a percentage of 15-30% of the total value of the property to be purchased.

Yet owning a home is still out of reach for the average person.

According to Giorgos Giokas, sales director and co-founder of IMS (Individual Mortgage Solutions), which operates in the mortgage market, the average mortgage loan disbursement is between 110,000 and 120,000 euros, an increase of 15-20% compared to 2019 when it got to 100,000 euros set. This increase reflects the corresponding increase in home sold prices. Based on this data, the average monthly rate for a 30-year loan is around 550 euros.

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