National Bank of Greece ADR (fka NBGGY)

[Jester_Vandalay]

Fitch Predicts 15% Drop in Greek House Prices in Next Two Years

Greek real-estate prices are likely to decline 15 percent over the next two years as interest-rate increases make it harder for borrowers hit by austerity measures to keep up with mortgage payments, according to Fitch Ratings.

“It seems likely that increased arrears will begin to result in increased defaults during the coming year,” Fitch analysts Aksel Etingu and Peter Dossett said in a report released today. The proportion of loans not paid for more than three months rose to 2.7 percent in December from 0.9 percent a year earlier, they said.

Lower interest rates have been helping homeowners make debt repayments, keeping the drop in Greece’s house-price index to 4.3 percent since its 2008 peak, according to the report. Fitch said it expects the index to decline a further 15 percent over the next two years as the European interbank offered rate, or Euribor, drifts up.

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