After years of extreme dynamics, the first half of 2009 showed sustained contraction in lending reported by KreditTsentar. On loan consultant explain that both banks and consumers have preferred to await the development of the crisis on general economic indicators and the real estate market.
At the end of April under the influence of lower property prices and the first signal of reassurance to the consumer credit market in our country feel optimistic. Buyers returned, an initial study and then for real action, and those experiencing more serious difficulties have taken consistent steps to address the situation in which increased the total momentum in the sector.
Total market situation
Comparative analysis of data from the first half of 2009 compared to that of the last 2008 years shows a decline in almost all major indicators are categorical KreditTsentar. The reason is uncertainty in depth is a result of growing unemployment and uncertainty about the depth of the global crisis. The good news was the stability of the banking system and relatively low share of bad loans.
Several types of transactions are concluded in the first half of 2009 as the largest share of traditional mortgage loans for purchase of property, followed by the classic consumer loans and consumer loans, which are used to supplement the savings and will also be invested in transactions. Although less downloading and mortgage loans for personal use, replacing partly business loans with owners of small companies or sole traders.
Movements in interest rates was negligible in the first half of 2008 interest in the Euro moved within 7.25% – 7.5%, while this year they reached the 8 – 10%, calculated by the consultant.
The period was marked by very high percentage of customers who stop early stage market research. Notwithstanding the low prices, which reduce significantly the total amount required for making a deal, people are still worried by high interest and considered them a serious obstacle.
Average amount of loan
Decrease of just over 21.8 percent average rate making loans in Sofia during the first half of 2009 it was 35 100 euros. The average amount of loans drawn in the same period of 2008 the whole country has reached 44 886 euros and for the first half of 2007 was 31 100 euros. This oprovergava allegations that indexes fell to levels of three or even five years.
The main reason for the decline, is in lower prices and lower percentage of funding. This dependence seems to be clear in the analysis of data in different cities of the country. In Sofia, where the market had the largest fluctuations in the price level, because of serious supply, even if there is growth versus the first half of 2007.
The second most important factor – the percentage of decline in financing the purchase of property has played its role in all settlements. If in July 2008 called great credit of 300 000-350 000 euros, the financial institutions today are much more skeptical to the granting of large amounts, except where the benefit is significant and unique characteristics.
Ratio euro / euro for the country in appropriations continue to increase in favor of a common currency, the first half of 2009 the ratio is 81/19 to 69/31 for the same period of 2008 and 52/48 for the six first in 2007
The main reason is the higher interest loans in BGN. Expectations of the consultants are KreditTsentar the trend would be maintained.
The maximum amount of funding was discussed most frequently by customers and financial institutions. The reason is the movement of property prices down, and the higher rates of risk, which banks are required to calculate each transaction. If the middle of 2008 the highest share occupied loans are funded between 80 and 90 percent of the purchase it today in the general case be granted between 40 and 60 percent. Already too risky as products, loans with 100 percent financing are gone, for comparison, even in 2007 they were present in 4% of the general title.
At the beginning of 2007 for the first time there were loans for a period of 35 years and quickly gathered force due to the positive combination of lower monthly payments and falling interest rates. In the first half of 2008 the largest share of loans are more than 25 years. In the year 2009 the selection of people to stop on loans with an average length and almost the entire volume is between 10 and 25 years. The reason is the awareness that any extension leads to increased costs of credit, but now all customers are sensitive about price.
Rising unemployment combined with higher interest rates and monthly payments of the customers stood in front of difficulties in repayment of their obligations. People who have difficulties, it is appropriate to proceed to the first renegotiation of the period or negotiate a grace period. There are cases where this does not help the owners and is more profitable to sell the property on the open market than the credit required to make early and properties to be sold at auction by the judge performer. Tenders of those vendors are very competitive, which from January to June the share of mortgage loans drawn for the purchase of already mortgaged house grew.
Expected in the second half of 2009 credits allocated volumes to increase as a result of a wave of purchases, motivated by the falling prices of real estate. However, volumes will stay away from those that are marketed in 2006, 2007 and the first half of 2008, from KreditTsentar comment. We expect interest rates to remain around current by individual financial institutions can improve their conditions with the aim of lending a certain market share in mortgage lending to individuals. The proportion of funding will continue until around 60 – 70% of the value of the property, as property will be overstated in the disadvantageous position in terms of financing. In the second half will appear first for the so-called honest and loyal customers – they will offer easier access to credit and better parameters of the loans to customers with a clean credit history, using a variety of banking services and have demonstrated they can observe the conditions of their contracts.