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Loan restructuring and new mortgages for 2020

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Loan restructuring and new mortgages for 2020

Loan restructuring is one of the main tools for managing NPLs, as it is an important leverage tool. Through this process, financial institutions have managed to significantly reduce their lending portfolios (especially from 2016 onwards), as well as to facilitate agreements through auctions and / or internal / external management units. At the same time, it is important for the potential situation of the real estate sector to study the progress of new mortgages granted by financial institutions, mainly due to their strong relationship with business cycle fluctuations, as well as the course of the financial sector.

On a Pancyprian basis

i. Restructuring

In the year 2020 (January – December) the number of sales of real estate in Cyprus amounted to 12,708, of which 1791 concerned loan restructuring, ie at a rate of 14.1%. In number, Nicosia holds the lead with 41% of all restructurings. It is followed by Limassol with 22% and Paphos and Larnaca with 16% and 15% respectively. In terms of value, the restructurings in Nicosia and Limassol far exceed the other provinces, since with a total of € 289 million, they represent 77% of the value of all the restructurings for the year.

Loan restructuring and new mortgages for 2020

Loan restructuring and new mortgages for 2020

As can be seen from the graph below, the vast majority of restructurings, both in value and number, concern fields and plots.

Loan restructuring and new mortgages for 2020

i. Mortgages

Based on the latest data of the Land Registry and Surveying, in the year 2020, 14269 mortgages from Cyprus were assigned with a total value of € 2.9 billion. Compared to the same period last year, mortgages seem to have decreased by 11.5% in number and about 6.1% in value. The largest decrease on an annual basis was recorded in the quarter March-May and especially in April where it reached 77% in volume and 74.8% in value, while the largest annual increases were recorded in February and November with 73.2% and 61.1% respectively.

Loan restructuring and new mortgages for 2020

Loan restructuring and new mortgages for 2020

Loan restructuring and new mortgages for 2020

As can be seen from the graphs above, the provinces are quite different from each other and their further analysis is important. Below is a brief analysis for each of the five provinces for the entire year 2020.

Nicosia

During the reporting period, 732 restructurings took place in Nicosia, with a total value of approximately € 179.1 million. Most concerned fields, at 49%, followed by plots with 22%, apartments with 11% and houses with 10%. This picture is differentiated by analyzing the values of the restructurings since those that concern plots with a total value of approximately € 71.2 million, or 40%, are superior. This is followed by the restructuring of fields with € 29.2 million, or 16%, and houses with € 24.6 million, or 14%.

Mortgages during the same period in the province of Nicosia, decreased by 7.6% in number and 14.6% in value compared to the corresponding period last year. Although in general there was an increase in most months, the annual decrease in the period March – May was so strong (on average 190.5% in number and 207.5% in value) that it kept the trend at a negative level.

Limassol

Last year, 2020, the District of Limassol held the second place in relation to the number of restructurings with a total of 319 cases with a total value of € 109.6 million. Most restructurings concern land with 46% of the total consisting of fields and 24 % plots. Housing restructuring follows with 12%. In value, although the restructuring of fields is superior with € 39.3 million, or 36% of the total value, the stores follow with € 17.1 million, or 16%, and the commercial buildings and plots with 15 million or 14% for each category.

Limassol seems that despite the uncertainty created in the economy due to the coronavirus pandemic, but mainly the abrupt cessation of KEP, it managed to restrain the assignment of mortgages. Although in number an annual decrease of 11.7% was recorded, in value a small increase of 0.6% was recorded, which is mainly due to the month of November where the increase compared to the previous period was of the order of 106.8%.

Larnaca

In the Province of Larnaca, 106 restructurings were recorded with a total value of € 34.9 million, the second least after the Province of Famagusta. By property category, most restructurings both in volume (129 or 47%) and in value (€ 10 million or 29%) concern fields and are followed by the categories of plots and houses.

The assignment of mortgages in the Province of Larnaca for the year 2020 decreased by 18% in number and 13% in value on an annual basis. Although the year started in an upward trend, with February recording an annual increase of 104.3% in number and 610.7% in mortgage value, the advent of 'lockdown' brought a continuous period of negative performance. The positive signs recorded in October and November did not appear to be enough to overturn the general picture.

Famagusta

In the Province of Famagusta the fewest restructurings were recorded, 106, worth € 11.9 million with 70% concerning fields and 10% apartments. In value, the restructuring of fields reached € 6.4 million, accounting for 54% of the total. Next are the apartments with € 1.7m. or 14%, and homes with € 1.6 million, or 13%.

In the province of Famagusta, the largest decrease was recorded compared to the corresponding period last year, reaching 17% in number and 26% in mortgage value. The downward trend was evident from the beginning of the year and intensified during the 'lockdown' period. Nevertheless, approaching the end of the year, the trend was reversed, recording an increase of 47.3% in number and 581.7% in value in November.

Paphos

Finally, in the District of Paphos, 280 restructurings were recorded with a total value of € 37.7 million. 60% of the restructurings concerned fields and 16% plots. In value, the largest amount of restructured properties, € 16.6 million or 44%, concerned fields. Subsequently, € 6.5 million related to plots and € 6.3 million related to houses.

The difficulties of the year, although negatively affected the number of registered mortgages by 12% compared to the corresponding period last year, but in value there was an increase of 37.3%. The upward trend in the value of mortgages is evident throughout the reporting period, since the negative percentages were recorded only in March and April with 16.4% and 29.6% respectively and December with 5.4%.

Andreas F. Christoforidis

CEO

ACAVALUATIONS

Real Estate Appraisers and Consultants

Source: www.philenews.com

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