Thus, the average interest rate for mortgage loans granted in Bucharest in the first six months of 2024 was approximately 6% per annum, according to the company's calculations based on data from the banking sector. Over 90% of the approved mortgage loans in 2024 were represented by loans with fixed interest rates.
The installment of a mortgage loan worth approximately €61,500 (the equivalent of RON 292,000) contracted in 2019 reached a value of RON 1,881 at the middle of this year, similar to the one recorded in 2019, of RON 1,868 – when the average interest rate on Bucharest's mortgage market was similar to current one, namely 5.93% per annum.
In total, the average monthly installment paid between 2019 and 2024 for the analyzed mortgage loan had a value of RON 1.890, 1.1% higher than the initial assumed level, despite the high interest rates recorded in the last two years. The SVN Credit analysis also shows that the current installment for a mortgage loan could be decreased by about 22.5% compared to the level registered last year through switching to a fixed interest rate.
”One of the most important factors in analyzing a mortgage financing is the long-term evolution. Market data shows that, on average, a mortgage loan stays in a bank's portfolio for 10-11 years. In this period are recorded both historical lows, specifically to a global pandemic that occurs once in a century, but also absolute peaks, specific, for example, to a period of record inflation that occurs every few decades. Overall, interest rates follow a trajectory with multiple long-term ups and downs, the trend being, in general, one of decrease, as banking competition intensifies,” commented Alexandru Radulescu, managing partner SVN Romania | Credit & Financial Solutions.
Compared to the registered incomes, the current installment of a mortgage loan worth €61,500 granted in 2019 represents about 36% of the national average wage, compared with a level of about 59% registered five years ago. This decrease came as a result of the increase in the average wage registered at a national level, which reached a value of RON 5,176 in June this year, 65% above the level registered in 2019.
Mortgage loans worth €4.5 billion were granted in total at a national level in the first half of 2024 according to data released by the National Bank of Romania, up 78% compared with the first half of last year – please note that this volume also includes refinancing, conversions, transfers and restructurings.
The average mortgage loan granted at a national level in 2023 had a value of about €62,000, while the average price of a property traded through a mortgage loan in 2023 was €85,000, up from €82,000 in 2022, according to SVN Credit calculations. In total, approximately 48,000 new mortgage loans were granted in Romania last year, compared to a level of approximately 55,000 new mortgage loans granted in 2022.
SVN Romania | Credit & Financial Solutions is one of the most important mortgage brokers in Romania, with a volume of €91 million mortgages brokered in 2023. The company has four offices in Bucharest and 13 in the country, in Arad, Bacau, Brasov, Calarasi, Cluj – Napoca, Constanta, Iasi, Oradea, Ploiesti, Ramnicu Valcea, Sibiu, Timisoara and Targoviste. SVN Romania is one of the biggest real estate consultants active on the local market and the company with the most extended activity on the residential segment.
