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Bucharest
September 19, 2019
ECONOMY FINANCE&BANKING

Banks anticipate they will tighten mortgage lending in Q1 2016

Banks in Romania slightly eased the conditions for granting housing loans in the last quarter of 2015, on grounds of rising demand, however they anticipate, for the first time in the past year, that they will tighten the requirements for these loans in the coming period, reveal the findings of a quarterly lending survey by the National Bank of Romania (BNR).

‘Lending standards have recorded a moderate relaxation in the case of loans for buying houses and remained relatively constant for personal loans, in Q4 2015. For the first time in the past four quarters, banks estimate they will tighten to a certain extent the loaning standards for mortgage loans in the coming period (Q1/2016),’ the survey shows.

On the other hand, BNR notes that population’s demand for such loans significantly increased for a second consecutive quarter, and banks estimate the demand will continue to grow this quarter.

In respect to property prices, banks find a drop over the last quarter of 2015 and forecast similar developments in the first three months of 2016.

‘In comparison, banks in the Eurozone softened the lending standards for mortgage loans, while personal loan requirements were slightly tightened for the first time since Q4/2013. In the short term, (Q1/2016) banks in the Eurozone forecast a relaxation of the lending standards regardless of loan type,’ the survey also shows.

According to BNR, the factors that contributed to the relaxation of the lending standards for the mortgage loans in the last quarter of 2015 are the competition in the banking sector, expectations on the general economic situation, as well as BNR’s monetary and prudential policy decisions.

As far as consumer loans are concerned, banks maintained their loan requirements, except for the higher cap on loan value, which was moderately softened. Demand for such loans narrowed down at the end of 2015 and the credit institutions anticipate a continuation of this trend in the coming period.

Companies, however, were more active at the end of last year, with their demand for loans having increased significantly. ‘This dynamic was determined both by an increase in the corporate loan demand and in that of SMEs. In the next three months (Q1/2016), local banks forecast that this trend will continue, but at a more moderate pace, regardless of financing maturity or enterprises size category,’ the BNR survey also reveals.

Banks maintained their lending requirements for non-financial companies in the last quarter of 2015, therefore there can be noted a stabilising trend, as this is the third quarter in a row when the lending requirements were not modified. Moreover, the credit institutions estimate this dynamic will persist in the first quarter of 2016

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