Macroprudential borrower-based measures

Macroprudential borrower-based measures (BBMs) are aimed at preventing or mitigating systemic risks stemming from residential and commercial real estate lending and their interplay with real estate market developments

In general, BBMs help prevent excessive loosening of credit origination standards and thus strengthen the resilience of the financial system. They are complementary to other macroprudential measures used to address cyclical and structural systemic risks which have an impact on bank capital requirements, such as the Counter Cyclical Capital Buffer (CCyB) and the sectoral Systemic Risk Buffer (sSyRB).

BBMs consist of caps on specific ratios connected with the credit or the borrower or specific features of the credit and affect the risk parameters of credit secured by residential or commercial real estate.

The Bank of Greece’s power to enact BBMs is set out in the provisions of Article 133A, paragraph 3 of Law 4261/2014, which stipulates that the Bank of Greece may adopt a decision laying down the type of BBMs, the indicators or features of credits to which caps apply, the cap percentages, the types of credit to which BBMs apply, as well as the terms and conditions for their implementation.

In March 2024, the Bank of Greece enacted binding BBMs for loans and other credit to natural persons secured by residential real estate (RRE) located in Greece which become applicable on 1 January 2025.

In particular, the measures comprise:

- a cap on the debt service-to-income ratio at origination (DSTI-O ratio) of 50% for first-time buyers and 40% for second and subsequent buyers, and

- a cap on the loan-to-value ratio at origination (LTV-O ratio) of 90% for first-time buyers and 80% for second and subsequent buyers.

It should be noted that the debt service-to-income at origination (DSTI-O) ratio means the annual debt servicing costs of the total debt of the borrower divided by the borrower’s total annual disposable income at the time of loan/credit origination, while the loan-to-value at origination (LTV-O) ratio means the total amount of the loan or loan tranches secured by real estate property at the time of origination divided by the value of the real estate collateral at the time of origination.

The abovementioned BBMs shall not apply to non-performing loans and forborne loans (within the meaning of Articles 47a and 47b, respectively, of Regulation (EU) No 575/2013 of the European Parliament and the Council), to loans and other credit disbursed under national housing policy or green transition programmes subject to specific terms and conditions (such as the "My Home" loan programme), as well as portfolios of re-performing loans purchased by credit institutions from NPL servicers licensed under Law 5072/2023.

Credit providers are allowed to exempt 10% of the total number of new loans approved and at least partially disbursed in each quarter from each of the abovementioned caps.



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