The government announced on Tuesday a decision that offers relief to tens of thousands of borrowers of the so-called Katseli Law, about the protection of their main residence since early last decade.
The announcement has turned into a universal right for the vast majority of those borrowers, following the recent decision of the Supreme Court that ruled that the interest debtors pay will be calculated on the monthly installment only. This way, the Finance Ministry has put a definitive end to the conflicting interpretations formulated by the legal circles of the banks, arguing that although the interest will be calculated in the monthly installment, the basis of calculation will be the entire period of the arrangement, leading to a similar interest rate burden on the borrowers.
The legislative regulation, expected to clear Parliament on Wednesday, avoids a new cycle of appeals by thousands of borrowers who would be called upon to individually claim the implementation of the Supreme Court’s decision, as well as any other claims by other over-indebted borrowers, such as those who have joined the extrajudicial mechanism, since the legislation closes the door on similar appeals.
As Finance Minister Kyriakos Pierrakakis explained in his statements, the legislative regulation concerns those who have active settlements, which is more than 100,000 citizens. Based on the example he cited, a borrower with a debt balance of €144,500 in January 2024 would pay with the previous calculation method – in other words, interest on the remaining capital – a monthly installment of €731 for 300 months. With the new calculation method, the installment becomes €483. Of this amount, €482 is principal repayment, while the interest is only €1. So if he paid €731 from January 2024 to June 2026 he will have paid an excess amount for 30 months equal to the difference – that is €731 minus €483 times 30 months, which amounts to €7,440. Therefore, instead of having 270 installments remaining today to repay the loan, this amount is deducted from the installments he has to pay.
