* RON-denominated mortgage loans triple and form basis of new residential boom
The latest statistics published by the National Bank of Romania (BNR) point to the tripling of the stock of RON-denominated home loans, reaching up to RON 10.4 bln. In December alone the stock of loans grew by RON 1.4 bln, three times the size of the growth registered in previous months, which is the equivalent of approximately 7,000 new loans.
The drop seen in recent years in interest rates and in home prices is spurring real-estate transactions. The 50 per cent drop in interest rates and the dissipation of the crisis’s effects on real-estate prices are leading toward a reinvigoration of residential real-estate transactions, the statistics showing an acceleration in the sale of RON-denominated mortgage loans, but also in the number of new homes.
The volume of home loans has grown almost six fold in the last two years as a result of the drop registered by interest rates and of the switch exclusively to RON seen in the government’s First House program through which banks sell state-guaranteed real-estate loans. At the level of the whole market, the First House loans represent almost 50 per cent of the stock of real-estate loans.
Real-estate loans are currently sold at interest rates of approximately 5 per cent per year, which means that the monthly instalment in the case of a 30-year loan of RON 200,000 is of approximately RON 1,000.
The growth in mortgage loans also means a growth in construction site activity, especially in Bucharest where the number of homes and apartments constructed and delivered in the first nine months of last year has reached a new record high of over 5,600.