Bank Leumi will start selling mortgage loans with a zero down payment as of next month, with a maximum indebtedness level of 70% of a client's eligible income, according to the norms approved yesterday by the NBR.
"We are hoping to be able to start selling the new loans in September, because we have to operate a few adjustments to the products and announce these modifications throughout our network," Catalin Ionescu, senior manager of Bank Leumi's retail division, told ZF.
The bank will accept an indebtedness level of up to 70%; however, Ionescu says the indebtedness level could be lower depending on the type of product and the client's risk profile. The norms will also be relaxed for consumer credits, but the indebtedness level will not reach 70%. In the case of real estate funding, the bank will agree to reduce the down payment to zero, depending on when the building was built and where it is located.
In order to establish a client's eligible income, the bank deducts a minimum subsistence basket from each client's earnings. In addition, the bank considers an expenditure basket of at least 350 RON per individual, although the value can increase depending on the client's income. For additional family members, the bank considers at least 250 RON in expenditures for each family member. Consequently, for a family of three, the bank calculates a subsistence basket of 750 RON, while the NBR (National Bank of Romania) recommends a minimum level of 735 RON.
"We expect to see an increase in the average value of credits once we start applying our own norms, given that we are focusing on clients with medium and high incomes," says Ionescu.
Bank Leumi is the eighth bank in the system to secure the approval of the NBR to apply its own norms, after Alpha Bank, BRD-SocGen, Volksbank, BCR, ATE Bank, Banca Transilvania and CEC (The Romanian Savings Bank).
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