While the National Bank is threatening new moves to restrain the expansion of foreign currency lending, banks are competing with one another to sell foreign currency-denominated loans at low interest rates.
Beside foreign currency loans, they are also offering RON-denominated alternatives for which interest rates are up to five percent higher.
In effect, this leaves customers with no choice, especially since the domestic currency is continuing to grow in nominal terms.
The latest campaign of this sort was launched by UniCredit, which by mid September will offer real estate and mortgage loans at one percent lower - 8% per annum for euro-denominated financing and 13% for RON-denominated loans. Volksbank is also promoting real estate loans in this period, offering financing with a rate of 7% for euros and 9.5% for RON.
The bank adjusted its rates last month in a bid to keep its leading position on the retail market in terms of prices. Volksbank also offers these rates for RON-denominated personal loans guaranteed with a mortgage.
Earlier this summer saw Bancpost offer 7.5% per annum on loans used for purchasing houses.
Through its current promotional campaign, UniCredit is continuing its offensive on the retail market, after last month launching loans for personal use.
In addition to reducing the rate of interest, the repayment period has been extended by five years to 25 years. The value of a loan can vary between 15,000 and one million RON, or 5,000 and 250,000 euros, respectively. These new conditions are only available as part of a promotional campaign, however, valid until the middle of September.
In this way UniCredit is trying to gain ground on the retail market, where it does not have a foothold, before its scheduled merger with HVB Bank, which is also strengthening its position on the segment through its merger with Banca Tiriac.
In fact, a number of banks in the system have relaxed their lending conditions, amid increasing competition.
Demand for loans continues to be stimulated, however, despite central bank attempts at limiting the expansion of debt financing.
The phenomenon is more visible for RON-denominated loans, where interest rates are falling towards 10% per year, though banks have also continued to reduce rates for foreign currency loans.
This June, Banca Transilvania in its turn announced rate cuts for the loans in RON for private customers. It cut its rates by as much as five percent, both for housing loans and for consumer credits.
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