The ECB’s interest rate cuts are reaching Greek businesses with a significant delay as a result of the “resistance” of domestic banks.
ECB has cut interest rate cuts five times since June 2024, totaling 1.25 percentage points. Last week, it cut interest rates once again by 25 basis points.
In the year and a half to last December, the euro’s key interest rate was cut by 100 basis points, to 3%. During the same period, Greek banks reduced interest rates on new business loans (up to 250,000 euros) by 80 basis points, from 5.76% in May 2023 to 4.96% in December 2024, according to data released by the Bank of Greece for December.
This fact confirms the “resistance” of domestic banks to pass on the reductions in euro interest rates to Greek businesses.
On new mortgage loans, on the contrary, interest rates fell by 1.37 percentage points in the same period, from 4.96% in May 2023 while they stood at 3.59% in December 2024, which confirms that domestic credit institutions proceeded to a more drastic “correction” of interest rates compared to the reduction in the Eurozone base rate in the same period., which have made five interest rate cuts since June 2024, totaling 1.25 percentage points.In household term deposits, the average interest rate for one year fell from 1.83% in May 2023 to just 1.65% at the end of 2024 (a decrease of 18 basis points), which is due to the fact that deposit interest rates in Greece did not follow the corresponding European ones, nor of course the Euribor, in the three previous years.
In business term deposits, a higher decrease was recorded (62 basis points), as interest rates decreased from 3.18% to 2.56% in the same period in Greece, also less than the decrease in the ECB’s key interest rate by one percentage point.
In consumer loans, on the other hand, an increase to 15.02% was observed in November (from 14.95% in October) and 15.04% in December. In new business loans, the average interest rate decreased by 7 basis points to 5.88%, while the corresponding interest rate for professional loans decreased by 15 basis points to 7.21%.
The average interest rate on new business loans with a fixed term and a floating rate decreased by 13 basis points to 4.68%, while the average interest rate on fixed-term loans with a floating rate to small and medium-sized enterprises decreased by 5 basis points to 4.97%.
