Greece’s ambitious effort to ease its housing crunch through subsidized loans is facing an unexpected obstacle: a large share of the money may never reach households.
Greek banks are sounding the alarm over the risk that hundreds of millions of euros from the country’s Recovery and Resilience Fund could remain unused. The concern centers on two cornerstone housing programs, “Spiti Mou II” (My Home II) and “Anavathmizo to Spiti Mou” (Upgrade My Home), with a combined budget of €2.4 billion. Both are set to expire this summer.
According to banking officials monitoring applications and loan disbursements, unless conditions change significantly, as much as €800 million of the available funding may fail to flow into the economy.
Strong Demand, Limited Homes
The larger of the two programs, My Home II- Spiti Mou II, targets first-time homebuyers up to the age of 50. It offers mortgage loans with 50% to 75% of the interest rate subsidized by the state, resulting in unusually low monthly payments for the purchase of a primary residence.
Demand has been overwhelming. Applications far exceed the program’s financial capacity. Yet despite this strong interest, official data from the Ministry of National Economy and Finance show that absorption of funds remains just under 65%.
The bottleneck is not borrowers, but properties. Banks report a shortage of homes that meet the program’s eligibility criteria. Many approved applicants are unable to find suitable properties, while others face prices that are simply too high.
Although the government recently adjusted some of the program’s terms, banking sources say the changes do little to address the core issue: the narrow pool of eligible homes. Instead, they argue, the tweaks risk further boosting already strong demand without expanding supply.
For this reason, banks have pushed for a relaxation of one key rule: the construction date of eligible properties, currently capped at homes built by Dec. 31, 2007. They believe that if this criterion is broadened it could unlock more transactions.
A Generous Renovation Scheme With Few Takers
The picture is even more troubling for the program Upgrade My Home -Anavathmizo to Spiti Mou, which is designed to support home renovations through interest-free loans. With a total budget of €400 million, €300 million from recovery funds and €100 million from banks, it is considered one of the most favorable financing schemes currently on the market.
Borrowers pay no interest and no fees and can take out loans of up to €25,000 for energy upgrades or other improvements. Unlike similar programs, participants are not required to meet specific energy efficiency upgrade thresholds.
Despite these advantages, household interest has been muted. As of last September, only about €60 million, roughly 15% of the program’s budget, had been absorbed.
Banks say they lack a clear explanation. Some speculate that homeowners may prefer schemes offering direct grants rather than loans, even interest-free ones. Others suggest the program has simply not been promoted effectively.
What Comes Next
With both programs nearing their deadlines banking officials do not expect a dramatic turnaround. Anavathmizo to Spiti Mou is ending in June and Spiti Mou II in August.
In a best-case scenario, they estimate that €1.5 billion to €1.6 billion will be disbursed through Spiti Mou II, and about €100 million through the renovation program. That would leave close to €800 million unused.
Against this backdrop, banks are urging the government to act quickly, either by making more meaningful adjustments to the existing schemes or by redirecting the unspent funds to other housing or economic initiatives.
For a country grappling with rising housing costs and limited affordability, the stakes are high. Whether these funds can still make a tangible difference before the clock runs out remains an open question.
