The new benchmark used for calculating the interest rate on the new retail mortgage and consumer loans in Romania will be used by default for calculating the interest on existing loans of same categories, under an amendment to the emergency ordinance (OUG) 114/2018 proposed by the head of the Senate's economic committee, Daniel Zamfir, Agerpres reported.

The new benchmark, calculated based on actual interest rates on the money market, will be used for the new loans under OUG 19/2019 that modifies OUG 114/2018.

Bank debtors were initially supposed to re-finance their loans under the new terms. But Zamfir’s amendment involves the mandatory replacement of the old benchmark (based on banks’ quotations, rather than on actual money market transactions) with the new benchmark. Asked whether the new benchmark would bring debtors better terms, Zamfir said he was confident.

Simulations ran by bankers, quoted by Economica.net, indicate that for the time being the new benchmark is indeed more favorable to bank debtors. For instance, for a mortgage loan where the interest rate is currently 5.55% (per year), it will drop to 4.71% under the new methodology. But on the longer term, the impact might not be significant, if any.

The new benchmark comes in force as of May 2, after the OUG 19/2019 (modifying OUG 114/2018) was published on March 29. Under the form published, OUG 19 compels banks to replace the old benchmark with the new one within 60 days, at the debtors’ request. If the lawmakers pass Zamfir's amendment, the benchmark will be replaced by default for all loans subject to OUG 19.

editor@romania-insider.com

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