”Borrowers with non-performing loans (NPLs) with a mortgage on their primary residence, the value of which does not exceed €350,000, should not worry about being evicted”, begins a short piece in today’s Cyprus Mail. The article is badly enough written that it takes some time to make sense of it (and no, not primarily a translation problem). Though it is in part a problem of jargon, and not unique to Cyprus. Thus “borrowers with non-performing loans” does rather sound as if the poor unfortunates have been landed with loans that simply aren’t up to it. Nothing to do with them - just bad luck. “Does your loan perform?” “Not really. Sadly, it just lies there.” “But did it ever perform?” “Not at all well, I’m afraid.” “Ah well, some of them are like that.”
We are, of course, talking about bank loans, specifically in this case mortgages, that are not being repaid. And without wishing to sound like the cruel landlord, there is the fact that somebody - indeed identified later in the article as the taxpayer - will be assisting in the payment. If the property is worth no more than €350,000 ($532,000 CAD) the government will step up and cover one third of each monthly payment. Thus people who cannot afford to buy a house themselves are, through their taxes, subsidising those who have defaulted on mortgage payments. The percentage of Cypriot bank loans that are non-performing (the highest in Europe) is a continuing scandal, reaching a high in 2017 of close to half of all loans. And, as J points out, if the improvement since is down to the government making the payments, things aren’t much better now. So why doesn’t parliament get tougher? Well, there is the matter of the number of MPs with - non-performing loans.
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