site.btaMortgage Lending Marks Record Growth - Analysts

Mortgage Lending Marks Record Growth - Analysts

Sofia, July 9 (BTA) - A record growth of mortgage lending is
expected in Bulgaria in June. So far the Greek debt crisis has
not had any effect on the bank market here, analysts and credit
consultants commented for BTA.

The Bulgarian National Bank (BNB)'s month-on-month statistics
for June have not been released yet, but preliminary estimates
show a 30 per cent increase in mortgage loans, credit analyst
Tihomir Toshev said. A growth is also expected in July and
August, although smaller because of the summer holidays. Most
probably, there will also be even a more tangible growth in
lending by the end of the year, the highest in mortgage loans,
followed by corporate loans and consumer credit, he forecast.

Experts of one of the large commercial banks in Bulgaria have
similar expectations. They, too, forecast that interest in this
type of financing will probably increase in the second half of
the year.

The market trend of gradual decline of interest rates on new
loans for households persisted in the first half of the year.
The latest figures released by the BNB show that in May 2015 the
 average interest rate on new housing loans in leva was 5.95 per
 cent, down 0.70 percentage points from May 2014, the bank
experts say.

The annual percentage rate (APR) on loans for households has
been tending downward since 2011, and it reached 6.45 per cent
by May 2015, or 1.10 percentage points lower than in May 2014.
Bank experts say a mortgage loan now can be contracted on softer
 terms than before the crisis.

Toshev commented that in recent months many banks have improved
their mortgage conditions and offers loans at between 5.5 and 6
per cent interest, and promotional offers at an interest rate of
 even under 5.5 per cent are available for borrowers with high
contributory income and low indebtedness.

In consumer credit, the interest rate continues to range from 7
to 11 per cent, and the commonest rate is between 8 and 9 per
cent, Toshev said. In corporate loans, the interest rates are
declining, to 4-4.5 to 5 per cent, he added.

Business is now readier to look for loan financing because at a
relatively low rate, a company can finance substantial
improvements and respectively increase its revenue. According to
 Toshev, the growth of corporate credit is yet to be seen.
          
Mortgage loans in Bulgaria approximate 36,000 euro, the average
amount for Sofia approaching 50,000 euro, and in smaller cities
the sum is around 20,000-25,000 euro. In consumer credit, the
preferred sum is most frequently between 8,000 and 10,000 leva,
Toshev said.

According to data of the National Statistical Institute, 4.9 per
 cent more new housing units were commissioned in the first
quarter of 2015 than in the first quarter of 2014.