Romania's C-Bank Proposes Relaxed Mortgage Lending Rules

The bank's latest analysis reveals that "default rates are considerably lower among debtors with mortgage collaterals compared to other categories (e.g. unsecured consumer loans)," BNR said in a statement.

"[...] In order to limit the fallout of the global crisis on the domestic economy, the BNR board has deemed appropriate to make a distinction between lending requirements on mortgage-backed loans and those applicable to other loan categories, which requires amending the regulation," it said. Last year BNR tightened lending regulations to curb expanding consumption, which made it very difficult for low-income employees to get any credit.

Hence, the BNR board has decided that, based on in-depth analyses, lenders would have the possibility to calculate a higher indebtedness level for the borrowers that would have high-quality real estate assets as collateral for their credits.

The BNR did not provide further details on its decision, only saying that "it is up to lenders to set the actual lending and risk management conditions via their own lending rules, provided that they comply with the BNR guidelines in this field."

Commercial banks have repeatedly asked BNR to relax its regulations that restrict lending growth, pointing to the economic risks of a slowing consumption amidst the global financial crisis.