2024-09-13 06:34:38
The BNB obliged banks to grant loans for a term not longer than 30 years, the percentage of self-participation to be 15%, and the amount of the contribution not to be more than half of the income
Do you want to take out a mortgage loan? On October 1, banks will be obliged to lend money only to those who meet three conditions.
This was decided by the Board of the BNB at its regular meeting, the institution announced. The requirements cover the “Households” sector and are applied to loans secured by residential real estate located on the territory of the Republic of Bulgaria, and are observed both on an individual and consolidated basis.
Thus, only those who:
1. The ratio between the amount of the loan and the value of the collateral at the time of granting (LTV-O) should be no higher than 85%. The ratio is calculated according to the minimum set of indicators for monitoring credit standards approved by the Board of the BNB when granting loans secured by the National Bank of Ukraine;
2. The ratio between the amount of current payments in connection with debt service and the borrower’s monthly income at the time of granting (DSTI-O) should be no higher than 50%. The ratio is calculated according to the minimum set of indicators for monitoring credit standards approved by the Board of the BNB when granting loans secured by the National Bank of Ukraine;
3. The maximum term under the loan agreement (maturity) should not be longer than 30 years. Maturity is calculated according to the minimum set of indicators approved by the Board of the BNB for monitoring credit standards in the granting of loans secured by GNI.
The requirements come into force from October 1, 2024, and banks and branches of foreign banks should bring their activity on granting and renegotiating credits in accordance with the established deadline.
It is permissible to approve or renegotiate loans with parameters that deviate from the introduced requirements, and the total approved or renegotiated amount of such loans in the current quarter cannot be higher than 5% of the total gross value of newly granted or renegotiated loans in the previous quarter quarter. In order to track tolerances, additional reporting is introduced.
The decision of the BNB Management Board to introduce requirements represents a subsequent stage of the formalized process of risk assessment in lending secured by GNI, including the development of a quantitative risk assessment methodology (risk map), a regular monitoring and reporting mechanism. On this basis, the periodic analysis shows that credit activity in the segment continues to be characterized by pronounced credit growth, which further accelerates in the second quarter of 2024. The risk assessment points to a move into a higher risk category of certain indicators (credit growth , indebtedness, housing prices and overvaluation, average size of loans, etc.), which signals a potential accumulation of medium-term risks for the banking system. There is no deterioration in the weighted average indicators for credit standards, but the identified potential areas of vulnerability remain along the lines of the population of loans with ratios in high intervals. The introduced requirements are aimed at preventively ensuring the stability of the banking system in the context of increasing trends in the manifestation of cyclical risks in the medium term.
The requirements support the maintenance of the stability of the banking system by complementing the capital buffers applied by the BNB to date, set at one of the highest levels in Europe. They do not have a deterrent nature to credit activity, but follow the BNB’s supervisory approach of high conservatism and the general practice of macroprudential measures applied in EU countries.