Bankers have become much more cautious when it comes to granting real estate loans since the beginning of the year, but now have to relax terms in order to find clients for loans.
In the first quarter of the year, banks accepted an average indebtedness degree (the share of the monthly instalment in a client's income) of 43%, from 49% in the last quarter of last year and 55% last autumn, according to a study of the NBR (National Bank of Romania). The down payment required by banks went up, as well. On average, the ratio between the value of the loan and the value of guarantees pledged (loan-to-value ratio) fell to 64% for loans granted in the first three months of the year, from 71% in the fourth quarter of 2008, and 75% last summer.
"Terms for taking out a real estate loan are much more restrictive this year, for all banks. At the beginning of the year we accepted a maximum 65% ratio. Because the market is rather frozen, we tried to relax terms. We all will have to relax them because otherwise we won't be able to give out loans," says Roxana Bolocan, retail credits manager at Volksbank, one of the players that grew aggressively last year on real estate financing. Now Volksbank accepts a 75% maximum indebtedness level, i.e. the client has to come up with at least 25% of the value of the house they want to buy. The down payment required fluctuates from one bank to another, and can go from 15-20% to 50%.
"Even though banks now ask that the down payment should account for a higher percentage of the overall sum, it is measured against a significantly lower value of homes, so clients actually have to contribute a lower amount," says Anca Bidian, general manager of Kiwi Finance, the largest credit broker on the Romanian market.
According to her, credit demand is going up, which is encouraging, but the 2009 rise cannot compare with the one recorded in 2008.
Bidian says banks have become somewhat more relaxed in their evaluation of credit applications
"Last winter up to 80% of the applications we sent were rejected. Now the acceptance degree amounts to 50-60%, depending on the product."
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
