What's more important: to have a place to stay or to have your own place? Or do you agree to actually buy a house when you are about to retire but where you can live as of now? In this case, prepare for eternal indebtedness, just like the Americans, the British or the Japanese.
ING Group yesterday launched the first 25-year mortgage loans on the Romanian market, proposing Romanians more than just a mere banking credit - another perception on indebtedness: the neverending payments, the kind of expenses that last the whole life.
Given the inflation and rate cuts that have been visible in the developed countries in the past two decades, the 25 or 30-year mortgage has greatly developed, so that no one even thinks about saving money to buy a house anymore.
"We will grant the first loans on April 2, this year," country chairman ING Romania Jan OP de Beeck said yesterday, ending speculations about the new product, which had left both competitors and customers guessing.
Because of the high inflation rates and the high economic risks, banks only started granting house loans for longer intervals (10, 12 and 15 years) several years ago. Most of these loans are in foreign currency.
"The inflation drop has paved the way for the long-term ROL-denominated mortgage. We believe the time has come for the 25-year local currency mortgage to be introduced on the Romanian market, as well," Jan Op de Beeck said.
In Hungary, the Czech Republic and Slovakia, where inflation was tamed long ago, the credits granted for long and very long periods of time are no longer a novelty.
In the case of the three ROL credits, differentiated by the interest rate intervals (three months, two years or five years) but also by the previous relations between the customer and ING Nederlanden, rates range between 17-23.5%. Still high at first sight: triple as compared to the euro-denominated credit: 7.75%.
"The interest rates should not be compared, since the currency risk (potential depreciation of the ROL against the euro, i.e.) is very significant. The euro-denominated product is not our all-time favourite," de Beeck explained.
But where can danger stem from, give the possible real appreciation of the ROL against the single European currency in the medium term and the replacement of the domestic currency with the euro?
"We are talking about a long time, and, even if the exchange rate does follow this trend, there may be troublesome ups and downs. Houses are not an opportunity to play with the exchange rate. A long-term debt in a currency other than the local one presents a much too sophisticated risk for people," the ING official claims.
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