Bank Mortgage Credit Expanding
Hello everybody,
There is a press release on Focus that indicates that at least a few of the banks making mortgages in Bulgaria are starting to loosen the reigns a little for prime borrowers and prime properties. Here’s the article:
Banks lend up to 80% of the real property price
10 November 2009 | 00:15 | FOCUS News Agency
Sofia. The banks in Bulgaria have been getting increasingly resilient in their lending policies. At least 4 financial institutions have been reported lending amounts covering up to 80% of the real estate price – something we haven’t seen since the summer of 2008. According a recent market survey of CreditCenter, only people with steady income, willing to buy liquid apartments have benefitted from the more resilient terms.
Presently, only monolith buildings in Sofia, Varna, Plovdiv and Burgas can get you a loan that covers 80% of the deal.
Panel flats are still in the wrong end of the scale, as banks lend between 60% and 65% of the price.
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To me, that’s a reasonable move, both for the market and also for the banks! It appears that at least some of the less internationally-controlled banks are feeling the pinch of reduced interest income. The international banks are most likely still under severe constraint by their parent organisations that could still be in trouble from the “crisis.”
The next item in the same series of press releases by Focus talks about the increase in bad loans in Bulgaria to over 8,5 percent. They don’t say whether that’s based on the number of loans or the value if the loans, but I expect the former. That’s high, historically speaking, but under the circumstances, probably not that bad. For me, it represents a potential for the investor with cash to take over some prime properties at a severe discount, possibly even with a mortgage back from the seller (the bank) under certain circumstances.
In other news, there are opinions surfacing that the Bulgarian real estate market will bottom out in the spring-summer 2010 time frame. This would place the ideal timing for investing in the market (for people with resources and/or being classified as a prime borrower) in the coming six months. After that (when the 2010 summer season starts) the prices presumably will have already started the seasonal increase, and the best of the properties will already be taken or at least “reserved” in some way.
That’s all for now,
Craig
for
Good 2004
Bank Mortgage Credit Expanding
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