site.bta Loan Interests Will Continue to Fall, Households to Remain Cautious Regarding Financial Decisions - Analysis

Loan Interests Will Continue to Fall, Households to Remain Cautious Regarding Financial Decisions - Analysis


Sofia, January 5 (BTA) - The tendency of fall of loan interests
and the increased offering and competition between the financial
 institutions will continue during the next year as households
will remain cautious while taking financial decisions, according
 to an analysis of UniCredit Bulbank, published here on Monday.
The expectations about consumers' conduct in 2015 are based on
the positive signals about improvement of the macroeconomic
environment and the economic activity, the increased liquidity
in the system and the hesitant restoration of the labour market.
 

Transactions in immovables are expected to mark a negligible
growth of 5 per cent, which will stir the market of mortgage
credits

Prices of immovables are expected to increase slightly in the
next few months.

Regardless of the complex political and economic situation in
the country in 2014, the competition on the banking market
resulted in better conditions for the extension of loans, which
was mostly to the benefit of clients.

The increased activity of households during the last quarter of
2014 was mostly due to the first signs of political stability
and the wish of part of the households to raise their living
standard by moving to a larger house. Consumers, aged 36 to 45,
remain most active as they already have a share of over 47 per
cent of all borrowers.

Throughout 2014, there was a nearly 5 per cent growth of
applications for mortgage loans by natural persons compared to
the previous year. In the period under review, the average
amount of mortgage loans was almost 72,300 leva, about 4 per
cent up year-on-year. The average repayment term for mortgage
loans remained at 22 years.

Regardless of the wish of many banks to offer their clients
stability by not changing the amount of the monthly instalment,
the interest towards fixed-interest loans continued to fall,
while loans with attractive floating interest rates seemed more
attractive. One of the possible reasons for this was consumers'
expectation about low market interest indices in the short and
medium term.

2014 saw a higher demand for consumer loans and an increase of
their average amount up to 8,100 leva (compared to 7,300 leva in
 2013). On the other hand, clients demonstrated a wish for
faster repayment of their obligations as the average repayment
term for consumer loans fell from eight to seven years.