Growing pressure on housing finance corporation regarding loan delays
20 février 2024

Growing pressure on housing finance corporation regarding loan delays

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The Housing Finance Corporation (HFC) is under increasing pressure as delays in approving house loans continue to annoy applicants. At a recent House finance committee hearing to review the HFC's 2024 budget, questions were voiced about its ability to satisfy loan demand.

HFC's general manager, Christoforos Kaplanis, acknowledged the delays and ascribed them on understaffing. He emphasised the increase in loan applications between 2022 and 2023, with the organisation accepting 265 loans totaling €31.3 million in 2022 and 374 loans worth €57.5 million in 2023. Kaplanis emphasised that issuing house loans is a top priority in order to prevent purchasers from losing their advance payments.

Members of Parliament grilled Kaplanis over persistent complaints about loan processing delays. He reiterated that the delays were due to understaffing, noting that a hiring process initiated in 2021 was only completed the previous year. Kaplanis also pointed out that Nicosia and Limassol face the greatest demand, despite having only one HFC branch each. Consequently, some loan applications from these cities are being redirected to branches in other towns.

Currently, it takes an average of six to seven months to examine a loan application, according to Kaplanis. Andreas Kafkalias, an MP from Akel, expressed dissatisfaction with the HFC's performance, citing significant delays in processing applications for state-funded schemes and restructuring agreements.

Kafkalias urged immediate steps to address staffing and technological issues within the HFC. Established in 1980 to provide housing loans to low and medium-income families, the HFC operates under the supervision of the Central Bank of Cyprus.

The Finance Ministry previously raised concerns about the high level of outstanding debt owed to public-law organizations, particularly the HFC, the Central Agency for the Equitable Distribution of Burdens, and the Cyprus Land Development Corporation. As of March 2022, over 60% of loans granted by the HFC were classified as non-performing, with contracts terminated or legal action taken for loans totaling €59.7 million.

The growing pressure on the HFC underscores the urgent need for improvements in staffing and operational efficiency to meet the increasing demand for home loans and address concerns about loan processing delays.