Standard mortgages gain ground against Govt.-guaranteed loans in Romania

The volume of new loans extended under normal mortgage contracts was recently twice as large as the volume of Government-guaranteed mortgage loans (Prima Casa/First Home), Profit.ro concluded quoting data as of the end of March this year.

While banks have extended more than RON 8 billion (EUR 1.7 bln) of normal mortgage loans in each of the first three months of the year, the volume of First Home loans decreased to under RON 4 billion (EUR 0.8 bln) per month -- and the trend indicates further widening in the differential.

Prima Casa loans are no longer as popular as it was during 2012-2015 when they accounted for two third of the total new mortgage loans. In nominal terms, except for a surge in 2015-2016, the flow of First Home loans remained more or less constant while the standard mortgage loans have quadrupled since 2012.

Banks and their clients are increasingly moving towards standard mortgage loans after a decade in which the First Home government program was the major factor not only in lending to the population but also in the whole market. The decreasing importance of state-guaranteed loans shows that there is potential for lending even without Government intervention, Profit.ro concluded. The data also shows that Romanians prefer to protect from interest rate risk by paying higher fixed interest rates.

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