The ratio of the loans banks have to recover from clients andthe value of the collateral they hold for these loans is at acomfortable level, of less than 80% says NBR. As a paradox, theratio has remained constant over the last few years, although homeprices have fallen by as much as 50% in some cases.
The data revealed by the NBR are based on the reports of the tenmost important banks in terms of lending in Romania during aquarterly survey. The loan-to-value ratio is calculated only formortgage-backed loans.
"We have no accurate indicator of the real estate market,considering there are thousands of properties pledged as collateralfor non-performing loans now. This collateral will have to turnedinto cash, that is sold," says Matei Păun, managing partner of BACInvestment advisory firm.
NBR did not reveal the value of the mortgage-backed loans. Bankssold about 19 billion euros worth of such loans in 2007 and 2008alone, according to ZF's calculations based on the annual variationof the stock of loans to individuals and companies. The loansconsidered in the case of individuals were the regular mortgageloans and half of the stock of consumer loans, which, according toNBR are home equity loans. In case of companies 80% of the loansare mortgage-backed.
The low number of transactions on the real estate market makesit hard to establish the "right" value of the real estatecollateral.
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