70 PER CENT OF REAL ESTATE DEALS IN BULGARIA FINANCED THROUGH BANK LOANS

The average credit for the purchase of property in Bulgaria was EUR 26 000 in 2006. In the first months of 2007 that amount grew by 20 per cent to reach EUR 31 300, according to Credit Centre, a credit financing consultancy.

The company reports that about 18 per cent of their client in January sought a mortgage for more than 100 000 leva, or EUR 50 000. In the same period last year, only 6 per cent of clients sought a mortgage of that magnitude.

Interest rates in Bulgaria will differ from European levels in the next two years although they continue to decrease, Bulgarian credit consultants said. The current interest rates of Bulgarian banks for mortgages and home loans are around seven per cent. They said that 30 European banks are interested in entering the Bulgarian market.

After Bulgaria’s EU accession European banks no longer need license to operate on the Bulgarian market. This will bring a lot of changes in the Bulgarian bank sector. The number of products offered by the banks will increase significantly. At the moment a Bulgarian credit consultant could offer 120 products, while a consultant in UK could offer around 4000 bank products. Loans provided in Bulgaria for the purchase of a home off-plan are less than five per cent, Credit Centre said.

The first furtive efforts of Bulgarian banks to finance 90 per cent of a home value are made. Now Bulgarian banks lend no more than 80 per cent of the property value.

Bulgaria Property Wise