The home loan does not stop, increasing even for the first two months of this year

2024-04-02 14:33:00, Ekonomi CNA

The home loan does not stop, increasing even for the first two months of this

The growth of home loans is not stopping even in the first months of this year.

According to data from the Bank of Albania, for the period January-February, the banking sector disbursed about 7.5 billion new home loans, marking a new historical record for this period of the year.

Home loans are up 5.6% compared to the same period a year ago.

The start of the monetary policy tightening cycle in 2022 created expectations that home loans would gradually decrease, due to higher interest rates. So far, such a thing is not happening, also due to the fact that, at least in the local currency, the increase in interests turned out to be lower than expected.

The Bank of Albania has stopped the increase of the base rate at the level of 3.25%. With the drop in inflation during the first months of this year (at the level of 2.6% for February), the chances for further growth are small, at least with the data so far.

The relatively low base rate is reflected in low yields on government bonds and low interest rates on loans to the private sector.

The average interest rate of the loan portfolio for the purchase of housing by individuals in Lek currency in January this year fell further to the level of 4.65%, from 5.12% that had been in the same period last year. The decrease in interest rates has made the loan in Lek quite attractive. Data from the Bank of Albania showed that new loans in local currency to individuals increased by 78% in the first two months of this year.

The home loan does not stop, increasing even for the first two months of this

Meanwhile, the average interest rate of the loan portfolio for the purchase of housing by individuals in the euro currency reached 5.23% in November 2023, from 4.55% at the end of 2022. In the euro loan, a gradual increase in rates was observed. , reflecting the monetary tightening of the European Central Bank and the increase in Euribor.

Surveys by the Bank of Albania have shown that at least one third of transactions in the property market are financed with bank loans. The consistency of credit growth continues to support demand in the real estate market.

However, developments in the real estate market and bank loans for properties are assessed with concern by the International Monetary Fund (IMF), which in the last statement on Albania suggested to the Bank of Albania the establishment of a countercyclical capital increase for the banking sector. According to the IMF, the imposition of a countercyclical addition to the capital adequacy ratio for commercial banks may be considered in the medium term, to further strengthen financial stability.

The suggestions for the application of a countercyclical rate by the IMF are mainly based on the developments in the real estate market and the credit given by the banks to finance their purchase./ Monitor.al