The Cyprus Housing Finance Corporation (HFC) is set to proceed with the sale of non-performing loans (NPLs) worth €57 million from its total portfolio of €270 million, according to statements made before the House Finance Committee on Monday.
The announcement was made by HFC director general Christoforos Kaplanis during discussions on the organisation’s 2025 budget.
Speaking during a meeting of the committee, he clarified that the loans to be sold mainly concern primary residences valued above €250,000, as well as other housing loans that do not fall under the category of a primary residence, regardless of the outstanding amount.
Kaplanis pointed out that the sale of part of HFC’s loan portfolio was originally planned for 2025 but has been postponed to the following year due to delays in the implementation various government schemes.
These include the Oikia scheme, which aims to facilitate the management of loans granted under government housing schemes, and the mortgage-to-rent scheme, which aims to protect vulnerable homeowners facing foreclosure.
For the latter scheme, homeowners can transfer their property to state-owned asset management company Kedipes, with a monthly rent being paid, and the option to repurchase the property after five years.
He stressed that without the completion of these schemes, it remains uncertain how many loans will ultimately be included in the sale package.
Regarding the Oikia scheme, a document submitted to the parliamentary committee indicated that its outcomes had been taken into account.
It also included an assumption that 90 per cent of approved cases by the state treasury would be implemented.
Additionally, it was noted that 50 per cent of the appeals submitted for inclusion in the scheme were expected to be approved.
For the mortgage-to-rent scheme , Kaplanis stated that its results were considered based on applications submitted to Kedipes.
He mentioned that the scheme had a success rate of 72 per cent. He further explained that if this success rate were higher, it would positively impact the NPL management plan and the corporation’s weighted assets.
Kaplanis also pointed out the organisation has been focused on loan restructurings and repayments in recent years.
Over the past 18 months, he said, 1,334 loan cases were settled, including 802 restructurings and 531 full loan repayments.
Moreover, over the course of a year, the number of non-performing loans under the corporation’s management decreased significantly, from 2,100 in 2023 to 1,660 in 2024.
Addressing the time required for new loan approvals, Kaplanis stated that loans are now granted within three to four months, compared to the previous timeline of approximately a year.
He also mentioned that the HFC had faced a substantial influx of loan transfer requests from other banks due to its lower interest rates in previous years.
However, the organisation was unable to accommodate the high volume of applications as it would have required significantly larger capital reserves.
In response to a related query, Kaplanis revealed that the HFC issued approximately €65 million in loans over the past year.
He added that following an increase in both deposit and lending interest rates, there has been a notable decline in new loan applications and requests for loan transfers from other banks.
