Diminution in mortgage loans

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The setback on the real estate market prompted the diminution in July by 2% in the volume of loans contracted for the acquisition of housing units, the balance of loans in this segment being of 17.02 billion lei (approximately 4.7 billion euros), according to the figures of the National Bank of Romania.
 
The volume of new loans extended in foreign currency did not manage to cover, however, the reimbursements in July, despite bankers’ staking on rising interest of Romanians considering there’s only one month left until the implementation of stricter conditions for loans extension.
 
The pace in which the population and companies took loans from banks dropped, allowing for the share of debts in the total of loans grew. The balance of loans extended by banks amounted in July to 179.52 billion lei (about 50 billion euros), up 0.34% compared to the previous month.
In turn, the debts amassed by companies and population went up, calculated as share in the total of loans from 0.95% in June to 0.97% in July.
 
The implementation of restrictions to loans extended to population, the rise in the costs of a loan, alongside the high paces of loan extension one year ago, at the same time with the relaxation of loan extension conditions, might lead in 2008 to a rise in the non-governmental loan of 40%, lower than in the previous years, when they were of some 60%, Ionut Dumitru, chief manager of the macroeconomic research department with Raiffeisen bank told daily Business Standard.
 
„The loan would have lowered anyway, even without the restrictions on loans imposed by the National bank of Romania (BNR) because it would have difficult the growth pace registered last year maintain, when the condition for the population relaxed,” said the head of the macroeconomic research department at Raiffeisen Bank.
 
Although, in Romania the situation is atypical compared to developed European states, the consumer loans having a share of some 80% in the total of loans contracted by population, July brought for the first time a diminution in the loans for houses.On the other hand, the balance of loans for houses doubled as against July last year. The evolution was prompted by the relaxation in 2007 of the loan extension conditions, the indebtedness degree going up to 70% of revenues.
 
Thought as a way to counteract the excessive growth of loans extended to individuals, especially in foreign currency and to reduce the risks of uncontrolled exposure, the new regulative of the central bank might dwindle the Romanian’s appetite for loan extensions, especially that experts allow for the reduction of the indebtedness degree by 15% as against the maximum of 70% at present.
 
Meanwhile, on the other hand, until the introduction of new regulations of the central bank, bankers try to round off portfolio of loans, and big banks have already prolonged the validity of existing promotions of the offered loans.
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