Mortgage loans more affordable in Romania based on new benchmark

Romania’s five largest banks that have published new lending terms for individual clients, based on the new operation-based benchmark (IRCC) announced by the National Bank of Romania (BNR) on May 2, lowered the mortgage lending rates by up to one percentage point, Profit.ro reported.

However, some of them have adjusted slightly upwards the fixed spread added to the benchmark for calculating the actual mortgage lending rate, to offset the lower IRCC (new benchmark) compared to ROBOR (old reference).

IRCC substituted as of May 3 the quotations-based ROBOR as the mandatory benchmark used by banks to calculate variable interest rates offered to natural persons.

The most significant cuts operated in the mortgage interest rates were announced by CEC Bank, ING Bank and Raiffeisen Bank - as the three banks have maintained the spreads unchanged and just replaced ROBOR with the IRCC. Banca Comerciala Romana (BCR) and Banca Transilvania, however, increased their spreads by 0.3 percentage points (pp) and 0.25 pp respectively to compensate the lower benchmark.

BNR calculated the IRCC at 2.36% based on the average interest rate on interbank transactions in the last quarter of 2018. For comparison, the 3-month ROBOR average, the most used reference for local currency mortgages, was 3.17% in the same quarter.

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