Home / BUSINESS / NEWS / BNR wants to limit household credit. As of July 1, the household indebtedness level will no longer exceed 50pc of revenues
Insignificant growth of loans granted by banks in April, BNR data reveal

BNR wants to limit household credit. As of July 1, the household indebtedness level will no longer exceed 50pc of revenues

The National Bank of Romania (BNR) wants to restrict household credit and intends to drastically limit the household indebtedness for mortgage and consumer loans.

Most affected will be the Romanians with low incomes, stiri.tvr.ro informs.

The new regulation could be enforced as of July 1.

Thus, banks could be forced to grant loans on stricter conditions. Currently the accepted indebtedness level can reach 70% for mortgage loans, depending on the bank.

As of July 1, a person wanting to get a loan in national currency to buy an apartment, the monthly rate must not exceed 50% of his earnings, for the consumer loans the limit will be 30%.

BNR wants to enforce this regulation in order to avoid household over-indebtedness and a situation similar to the one in 2008-2009 when, due to the crisis, the revenues dropped sharply and people faced difficulties in paying back the credit.

According to analysts, the decision would temper the real estate market, which is moderately heating up. The number of real estate projects is on significant growth as well as the prices requested by the developers.

Economists say the decision is welcome, given that people have problems in paying the rates, due to the increasing interest rates. The 3-month ROBOR Index has reached 2.90%, the highest level in the past three and a half years.

Sources say that BNR is still pondering the limits for indebtedness.

According to capital.ro, an appendix to the regulation reads that the highest indebtedness level for consumer credit will be 30% for loans with fixed interest rate and 25% for loans with variable interest rate.

For loans in foreign currency, the new regulation reportedly provides that the indebtedness level will be of only 15% for variable rates loans.

Before 2007, the household indebtedness level was 30% for consumer loans and 35% for mortgage loans.

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