The banks in Romania continued to relax their lending policy related to individual mortgage loans in the last quarter of 2015, as the demand for such loans increased.

However, the banks anticipate that they will tighten the conditions for granting mortgage loans in the first quarter of 2016, for the first time in the last four quarters, according to a quarterly survey made by Romania’s National Bank (BNR).

The population’s demand for real estate loans has seen a significant increase in the fourth quarter of last year (Q4 2015), for the second consecutive quarter, according to BNR’s survey. The trend is expected to continue in the first quarter of this year.

The lower interest rates and lower residential prices have been the main drivers for the increase in mortgage loan demand.

However, the new law on giving in payment, which would allow mortgage debtors to give the mortgaged assets to the bank if they can’t repay their loans, has made local banks more cautious. Raiffeisen Bank, one of the top banks in Romania, has already tightened the mortgage lending conditions by increasing the advance payment on mortgage loans to 35% (for local currency loans) and 40% (for loans in euro).

Other big banks have already signaled they would take similar measures in case the Parliament passes the law.

editor@romania-insider.com