The Greek government’s latest effort to ease the burden on distressed homeowners is delivering meaningful relief to thousands of borrowers. Yet it is also drawing criticism for creating what opponents describe as a two-tier system that rewards those who managed to stay current on their debts while excluding many who were overwhelmed by years of economic turmoil.
The measure applies to mortgages restructured under Greece’s so-called Katseli Law, landmark legislation introduced during the country’s sovereign debt crisis to protect heavily indebted households and shield primary residences from foreclosure. The new framework follows a recent ruling by Greece’s highest civil court on how interest should be calculated for these loans.
Under the government’s plan, borrowers who remained compliant with court-approved repayment schedules will benefit from lower monthly installments, reduced interest charges and a reduction in their outstanding loan balances. Any excess interest paid in previous years will be credited toward repayment of the principal.
For many households, the change could translate into significant savings.
But the relief stops there.
Thousands of borrowers who lost their restructuring arrangements over the past decade—often because they lost jobs, suffered income declines or struggled with rising living costs—will receive no comparable benefit. Nor will borrowers who have already completed repayment of their loans, even if they paid interest that would now be calculated differently under the court’s interpretation.
The result is a growing debate over whether the government has corrected an injustice or merely created a new one.
Consider two borrowers with identical financial circumstances who entered the Katseli Law framework at the same time. One continued making court-mandated payments throughout the past decade and will now see part of the loan balance reduced. The other lost employment during the pandemic, fell behind on payments and ultimately lost the protection of the restructuring arrangement. Despite being affected by the same interest-calculation methodology, that borrower will receive no relief.
A similar discrepancy affects borrowers who have already repaid their debts. Many spent years making payments under a system that is now acknowledged to have been less favorable. Yet because their cases are considered closed, they will not receive refunds or credits for amounts already paid.
Critics argue that the distinction ignores the realities of Greece’s prolonged economic crisis, which was followed by the pandemic and, more recently, a sharp rise in inflation and household costs.
Supporters of the government’s approach counter that a broader application of the court ruling would carry substantial financial costs. Government estimates place the impact of the current intervention at more than €700 million ($800 million), with the burden expected to be shared among banks, loan-servicing companies and Greece’s state-backed Hercules asset-protection scheme, which was established to help reduce nonperforming loans in the banking system.
Expanding the relief to all affected borrowers, officials argue, would significantly increase those costs and could trigger a fresh wave of legal claims.
The controversy has already begun spilling into the political arena.
Former Prime Minister Antonis Samaras has publicly questioned the exclusion of borrowers who either completed their repayment obligations or lost restructuring protection because of genuine financial distress. Such individuals, he argued, should not be treated as second-class citizens.
Consumer groups have adopted similar language, warning that the measure creates “borrowers of two speeds.” On one side are those who remained financially resilient enough to continue servicing their debts and now receive additional benefits. On the other are households that succumbed to unemployment, wage cuts or inflationary pressures and are left without compensation despite being affected by the same legal interpretation.
At the heart of the debate is a broader question that extends beyond mortgage law: whether governments should limit corrective measures to those still inside a system, or extend them to everyone who may have been disadvantaged by it.
