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Lending standards tightened significantly in Q1 2019 for both property purchase loans and consumer loans, reveals a survey conducted by the National Bank of Romania (BNR) on lending to non-financial companies and to the population.
According to the survey, the banks kept their lending standards for non-financial companies unchanged as compared to the previous quarter.
Credit institutions anticipate that in Q2 2019 lending standards will get marginally stricter for real estate loans, and moderately tougher for consumer loans. For non-financial companies, the banks expect lending standards to get marginally stricter.
According to the survey, there was a marginal increase in demand for housing and land loans, while demand for household consumer loans decreased significantly. Lending standards for household consumer loans tightened significantly in Q1 2019 as a result of BNR's monetary and prudential policy decisions and also due to expectations of the population's financial situation.
The terms of consumer loan contracts in Q1 2019 got moderately stricter in connection with the spread of the loan's average interest rate to the one-month ROBOR, and significantly stricter due to the debt service to the monthly income ratio.
There was a significant decrease in demand for consumer loans in Q1 2019, in line with the banks' expectations from the previous quarter. The drop was significant for mortgage loans and unsecured loans, and moderate for credit cards. Against this background, the rejection rate for consumer loan applications increased significantly. For the next quarter, banks expect a moderate decrease in demand for all consumer loan categories.
The BNR notes that the survey is conducted quarterly in January, April, July and October and is based on a questionnaire (released in the May 2008 analysis) which is sent to the top 10 banks by their share of the corporate and retail lending market. These institutions account for about 80 percent of lending to these sectors.
AGERPRES
