Low Interest Rates Popularise Bulgaria’s Mortgages

LOWER interest rates are boosting the popularity of mortgage loans in Bulgaria, a survey by HVB Bank Biochim and Hebros Bank has found.

The “quality survey” was conducted in early October among 300 respondents using direct personal interviews, the banks said on October 20.

More than half of those polled, who had contracted or were planning to contract a mortgage loan from a bank, use or intend to use the money to buy real estate. A relatively large portion (26 per cent) contract a mortgage loan to expand their business, according to the survey.

About 46 per cent of respondents said that interest rates on mortgage loans were still “prohibitively” high, and only 11.2 per cent said that the rates were “acceptable”.

Now that several financial institutions have announced lower interest rates in recent weeks, an increasing number of people can be expected to find that the rates are “acceptable”, which will also boost the number of mortgage-loan borrowers, the report accompanying the survey said.

One in three of those polled said that a decrease in interest rates would result in a substantial increase in the number of people who would seek a bank loan. About half of the respondents expected some, but not a substantial, increase. In general, most of those polled expected lower interest to attract more clients to mortgage lenders.

More than 70 per cent of the respondents were aware that loans in currencies other than US dollars and euro were available abroad at interest appreciably lower than the market rate, and about half would opt for loans in Swiss francs because of the sizably lower monthly payment, the two banks said.

Most banks have recently eased the requirements for mortgage loans and have launched a series of promotions in order to attract customers and increase their market share. However, the competition for customers has also attracted high-risk borrowers, who are already facing difficulties in servicing their loans.

Source: The Sofia Echo