Interest rates for ROL-denominated mortgages are falling!
Alpha Bank, the first domestic bank to launch home-buying finance products, has cut the variable interest rates it charges for ROL-denominated mortgages by eight percentage points, from 22 to 14%.
This is followed by ING Bank, which is preparing to start February with an offer of 13% in ROL, which is fixed over the first five years of the lending period. This follows their attempt early last year to promote a product with a rate of 13.5% per year.
"Analysing the descending tendency of banking rates, the Assets and Liabilities Management Committee of Alpha Bank has decided that for mortgages, where the maturity term can reach 25 years, we should make a substantial reduction to instalments," said the bank's deputy chairman, Radu Ghetea, in a quote by Mediafax.
Paul Prodan, the executive manager with ING Bank, told Ziarul Financiar that the mortgages with a 13% interest rate in ROL would be the "prima donna" of the bank's portfolio.
"During our promotional 13.5% campaign, we saw an increase of about 25% in the volume of mortgages. We are making the transit from a promotion to a permanent offer," says Prodan.
So far, most commercial banks have not bothered to promote their ROL-denominated lending offers, knowing that comparison with foreign currency-denominated loans would put them out of the race.
The ongoing decreasing trend in interest rates for domestic currency-denominated financing is likely to create discussion as to the advantages of ROL-denominated lending, probably starting with the middle of this year.
BCR, the largest bank on the market, currently charges a variable rate for ROL-denominated mortgages, which is indexed to the six-month BUBOR rate on the inter-bank monetary market. After the latest adjustment, rates stood at 22.16% annually. BRD, the second largest player on the market, is less active in this field, citing the liquidity risk of real estate. For its part, Raiffeisen Bank does not have a mortgage offer in its portfolio, only realty loans.
However, it will be a long time before we can speak of a market for ROL-denominated mortgages: from a total of almost 800 million euros in late November 2004, ROL-denominated mortgages accounted for only 10%, with the largest slice going to euro and dollar-denominated financing. razvan.voican@zf.ro
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