Obtaining Loan For the Purchase of Prefab Panel Apartment Gets More Difficult

Bulgaria's mortgage loan market was on vacation in August after the steep growth recorded in July. The lending was also affected in the holiday month, including the volume of the loans extended and their average size. The trend was witnessed in all cities across the country and may be attributed to the holiday season and the vacations of the banking employees. A considerable amount of the loan applications were not processed and will be reviewed in the start of the active season in September. August is a traditionally weak month for the banking system, according to Tihomir Toshev, executive director of CreditCenter. The smaller number of inquiries does not come as a surprise as we expect this slowdown to be offset during the most active period for the purchasing of properties, which is the end of the calendar year. All the declines mentioned today are for the month of August, while July was quite active, which actually means that the market has retained its normal pace, Toshev added. The activity in August was aimed mainly in the field of consumer lending, where nearly 40% of the extended loans were intended for residential property repairs improvements. The interest rates on loans continued to go up in August. This trend does not affect the market anymore, as consumers with stable incomes have been the most active for the second month in a row. The good news for the market is that many customers are more cautious because of the global credit crisis, which reduces the risks for both parties. The type of properties bought with bank loans is indicative of this cautiousness. The share of pre-fabricated panel apartments declines at the expense of apartments in new brick buildings. A total of 74% of the loans in August were extended for the purchase brick apartments, 20% of the loans were extended for the purchase of prefab panel apartments and 6% for other type of properties. This comes as a result of the banking criteria (the repayment term of the loan combined with the age of the prefab panel apartment should not exceed 50 years) and the forecasts of real estate agencies that the prices of prefabricated panel apartments will go down at the expense of the newly built properties with good location. The average size of the loans extended in August stood at 47,351 euros. Mortgage loan repayment term – Aug 2008 Up to 10 years 4,08% 10 to 15 years 16,32% 16 to 20 years 28,57% 21 to 25 years 20,41% 26 to 30 years 20,41% Over 30 years 10,21% The share of the loans extended in Bulgarian currency went up to 21% in August but this is only temporarily, according to CreditCenter's experts. City Avg loan size in euros Ratio euros/leva % Sofia 68730 92/8 Varna 47952 73/37 Bourgas 44880 85/15 Plovdiv 43357 83/17 Stara Zagora 34500 85/15 Rousse 38555 53/47 Blagoevgrad 32600 81/19 Veliko Tarnovo 35500 76/24 Pleven 32100 75/15 Dobrich 41657 80/20 Kardjali 25385 90/10 Sliven 23122 75/25 Yambol 26290 46/54 Източник: Profit.bg