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Cyprus Housing Finance Corporation hit by global crisis

THE CYPRUS HOUSING Finance Corporation (HFC) has asked the Finance Minister to inform him on his plans to deal with the difficulties in the Cyprus banking system. The HFC is especially worried about what the government plans to do, especially since state funding towards banks was stopped and interest rates have increased due to the […]

THE CYPRUS HOUSING Finance Corporation (HFC) has asked the Finance Minister to inform him on his plans to deal with the difficulties in the Cyprus banking system.

The HFC is especially worried about what the government plans to do, especially since state funding towards banks was stopped and interest rates have increased due to the international financial crisis, it said yesterday.

Presenting the HFC 2009 budget yesterday, the Chairman of the organisation’s Board of Directors Christos Loizides informed the House Finance Committee that HFC income for 2009 was estimated at €15.75 million compared to the previous year, when it was €16.74 million.

Furthermore, expenditures are expected to reach €8.89 million compared to 2008’s €8.49 million.

The organisation’s surplus is also expected to decrease to €6.85 million compared to the previous year’s €8.24 million.

Loizides said the reduction in income was due to lower revenue from interest compared to last year.

In 2008, the HFC brought in €14.09 million from interest compared to the €12.94 million expected this year.

The difficulties have arisen because due to the international financial crisis and the consequential increase in interest rates, in tandem with acute competition among banks, the Housing Finance Corporation has been forced to offer high interest rates to its depositors, while maintaining the lowest possible interest rates for loans,” Loizides said.

He added that being aware of its social role, the HFC was offering its depositors up to 7.0 per cent interest, while for loans, it was charging up to 5.75 per cent.

Loizides called for an urgent meeting with Finance Minister Charilaos Stavrakis to be informed on what the government was prepared to do to help the Corporation.

Copyright © Cyprus Mail 2009

Editors Comment

Any organisation that offers depositors 7.0% interest while charging borrowers 5.75% is highly likely to end up in a very precarious situation!

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