Business Forum • 25 September, 2024 at 9:35 AM
Romania remained among the European Union states with the most accessible mortgage loans, considering the average wages at national level and the costs of buying a one-bedroom apartment through a 25-year mortgage loan, reveals a market report issued by online broker Ipotecare.ro and financial consultancy and mortgage lending company SVN Credit Romania.
Thus, the average instalment for purchasing a one-bedroom apartment in Bucharest holds a percentage of about 40% of the average net wage at a national level, Romania having the best value of this indicator at a regional level and among the best in the European Union.
The indicator's value is lower compared to the end of 2023, when the average instalment held a percentage of about 43%. The decrease was registered as a result of the decrease in mortgage interest rates, especially in the fixed rate segment, which represent over 90% of mortgage loans currently granted.
”Mortgage interest rates decreased in the last year in all the analysed states, and a more pronounced decrease in variable interest rates will be recorded starting next year. We have among the lowest interest rates in the region, and when analysing the differences between the mortgage interest rates applied locally and those in the Western European states, we should also take into account the inflation rate, which in Romania is more than twice as high as in the eurozone. In addition, the total costs of a mortgage loan are much higher in the other EU member states, due to higher home prices but also because of the associated costs (fees, taxes and insurances), which can amount to tens of thousands of Euros,” commented Alexandru Rădulescu, managing partner SVN Credit Romania.
The medium instalment for buying the same type of apartment in Budapest reached a level of 68.7% of the average wage at a national level recorded in Hungary, the average instalment for purchasing a mass market one-bedroom apartment in Warsaw holds a percentage of about 84% of the average national wage recorded in Poland, while in Prague the average instalment surpasses the national monthly average wage, having a value of about 103%.
Lower values for the indicator calculated by Ipotecare.ro and SVN Credit are being registered in Rome, where the average instalment has a value of about 38% of the average national monthly wage, in Berlin, where the value of the analysed indicator is 39% and in Madrid, where the instalment / wage report has a value of about 44%. Paris is the second last accessible mortgage market among the analysed cities, considering that the average instalment for buying a one-bedroom apartment reaches a percentage of about 89% of the average national wage.
In the analysis, the purchase of a one-bedroom apartment was taken into consideration, with a net surface of 50 square meters, delivered for at least 30 years and located outside the central and semi-central areas of EU's capital cities. Also, a 25-year mortgage was considered, 15% downpayment and a fixed interest rate in the first five years, without including the associated costs, such as fees, taxes and insurances. To determine the average interest rate, the mortgage loans with fixed interest rates from the top three banks in each analysed country were considered.
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 refinancings, conversions, transfers and restructurings.
Ipotecare.ro is an exclusively online broker, which uses multiple algorithms for generating the most optimal financing option for each specific situation. 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.