Romanian Ctrl Bk Mortgage Lending Eased Rules Come Into Force

By applying the stress test, banks had to take into account several risks as the foreign currency exchange risk, interest rate risks, alongside the potential cost increases due to fees and other costs included in the loan contract.

According to the new regulations, the indebtedness degree for mortgage lending will vary depending on the client, the loan type, duration and destination, while for non-mortgage lending the bank will also consider the risks taken into account at the stress test.

The new lending regulations also include the banks’ obligations to set up within their internal rules the guarantee conditions for each type of loan and the maximum admitted funding level for a mortgage loan compared with the value of the mortgaged property.

The new lending regulations will be valid only after being submitted to the central bank’s supervising commission.

Romania’s central bank said last week it agreed to increase the indebtedness degree for mortgage-guaranteed loans, as the default rates for this kind of lending is considerably lower than in the case of consumer loans.

According to the old regulation, banks will calculate a debt degree for household lending based on incomes that do not exceed by more than 20% the incomes declared to the Fiscal Authority in the previous year.

As a result of the old norms, the indebtedness degree for household lending decreased significantly, bankers said.

Romanian private lending rose 38.3% on the year in November in real terms to 195.131 billion lei (EUR1=RON4.3127) and increased by 0.7% in real terms on a monthly basis, according to the central bank data.

The private lending growth rhythm slowed down in November, from 44.8% (or 38.4% in real terms) on the year in October.

Analysts see private lending slowing futrther in December as well.