site.btaLoan Financing Unslacked, Even Speeds Up, Expert Tells BTA

"Loan financing is unslacked and is even picking up some speed," Association of Credit Intermediaries in Bulgaria (ACIB) Chairwoman Maria Petkova said in a BTA interview, commenting on the credit market situation halfway through 2024.

Among the market drivers, she mentioned the country's expected eurozone entry and persistent widespread attitudes to real estate purchase as an inflation hedge. Feedback from clients shows expectations of a continued appreciation on this market, which explains why the pace of credit and of real estate purchases is brisker than expected.

"The number of transactions has been decelerating back since last year, but the volume of mortgages is unchanged and has even increased," Petkova pointed out. Real estate prices are easing, she observed.

Replying to a question, the interviewee said that the highest demand is for mortgage loans ranging from EUR 120,000 to 160,000 to finance the purchase of a brickwork apartment in Sofia worth EUR 150,000 - EUR 200,000.

She sees the central bank's requirement for banks to apply six credit standards monitoring indicators when extending and renegotiating mortgage loans as precautionary, pointing out that such risk reduction policies and requirements to borrowers are already implemented by lenders which act even more conservatively at times. The ACIB Chair does not expect the new measures to curb loan financing tangibly.

In her opinion, the so-called quick loans extended by non-bank lenders are a cause for concern because they are not subject to such rigorous criteria. Petkova commented that the observance of the law governing quick loans is not transparent as are the lending practices in this segment, which is why borrowers there tend to run up new debts to serve old ones. 

Petkova expects the lending rates to remain unchanged until the end of the year or to be modified negligibly for existing clients. Banks will continue to offer very low rates to new borrowers. Clients will also be motivated to buy now because of uncertainty about the situation after the adoption of the euro, the expert pointed out.