Wednesday , March 22 2023

BNB: Be careful with home loans, interest will be attracted


Real estate agencies are already reporting a decline in the number of new properties.

Banks must be conservative in lending. They are like us

Demand for property at the end of 2018 reported to intermediaries

The growth of loans in 2018, associated with low interest rates, economic growth, income and bank competition, is creating an increasing risk.

This warning is recorded in the latest BNB Banking Bulletin in Bulgaria, which evaluates the industry since September 2018.

Direct risks are related to upcoming recessions and an unavoidable rise in interest rates. The impact is linked to the external shocks caused by the decline in economic activity in the eurozone, the Breckit, the US and China and the US-Russia trade war.

The biggest risk is the mortgage lending, which is long-term and where the growth last year was almost 10%.

Until September

loans are with

BGN 1.4 billion

or 12.6%

compared to September 2017, while the total exceeds BGN 60.3 billion, central bank notes. In the penultimate quarter of 2018, loans to private individuals amounted to BGN 375 million, to BGN 537 million and to other financial corporations – to £ 414 million

BGN 3.4 billion is the net amount of net loans, which is 4.1% of all net loans, of central bank notes. The capital of the banking system fully covers their size. However, the BNB recommends banks

to follow




The reasons are two – their share is still higher than the EU average, and for some credit institutions, high values ​​are combined with lower than average system depreciation.

In September. The BNB said it would increase its countercyclical buffer by up to 0.5%. This means that 0.5% of each loan is reserved as a reserve. The increase is expected to come into effect in October this year. Subsequently, the maturity was revoked in January, and for 10 banks it was increased to 0.75%. From the analysis it follows that

The BNB plan is

its size yes

increases to 1%

from 2020 onwards. The total accumulated depreciation in the banking system was BGN 4.6 billion.

The total amount of bank assets reached 103.2 billion, while in the third quarter of last year it has increased by BGN 3.1 billion.

Despite low interest rates on zero deposits, savings are on the rise – by September they are 2.4 billion BGN more than in September 2017 and reached 88.6 billion BGN.



interest rates

on deposits

and credits

The increase in housing loans has contributed to the rise in real estate prices, which stimulates demand for future purchase credits, central bankers warn.

We are adjusting our credit standards, they are conservative enough to avoid excessive and unwarranted lending to undermine the system, commented the Banking Association.

On Tuesday, one of the real estate agencies, Arco Real Estate, reported a decrease of 7.1% in the fourth quarter of 2018 compared to the previous year. According to real estate brokers, real estate price growth in 2018 was 6.3% lower than in the previous year. At the beginning of 2018, it reached 8.5%, and Bulgaria was ranked 10th in the EU, and at the end of the year our country resigned from 12th place.

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