The Cypriot government is looking to launch a rescue scheme that will help homeowners who are unable to maintain their mortgage repayments. A Ministry of Finance official told the House Human Rights Committee that those who are unable to repay their mortgages to commercial banks could receive support under a plan currently being drafted, Cyprus Property News reported.
The changes could see homeowners receiving up to €200,000 (£167,201) relief if they default on their first residence. The government will purchase their home and they will have the ability to become tenants paying a nominal rent, the news portal revealed. Homeowners unable to make their mortgage repayments will also be able to pay their loan off under favourable terms under a long period.
With the Cypriot economy still floundering, property owners will be grateful of any assistance to keep hold of their home. Conditions could get worse if deflation occurs too. Falling incomes and value of property could leave those in debt in real trouble. Indeed, attempts to bring about deflation could prove a threat to the entire EU. François Heisbourg, head of the Geneva International Institute for Strategic Studies, said: “Britain, the US, Japan, all have a strategy of monetary stimulus, but in the EU we have nothing but hard money. The currency doesn’t belong to bankers, and it doesn’t belong to Germany, it belongs to all members of the eurozone. We must face the reality that the EU itself is now threatened by the euro,” he said.
However, writing in the Cyprus Mail, Paul Rowland, founding member of a European consultancy for asset protection and debt management, explained that one of the only ways to strengthen the position of Cyprus is to look to quantitative easing, fiscal stimulus and the devaluation of the euro. This would attract more tourists to the country and ease the debt burden, he claims. Tourism is one of Cyprus’ main draws and the market attracts property investors year-after-year and creates jobs. Revitalising the sector will be crucial in any recovery, it can be argued.