“Relaxation of the mortgage loan rules will surely reinvigorate the residential market, but both buyers and lenders will focus more on the quality of products and reliability of the developers.
The sales’ squeeze in October 2008 has dramatically dented the poorly planned and marketed projects”, Eduard Uzunov, chairman of Regatta told Wall-Street. He added that only large developers with marketable projects would be able to sustain a competitive advantage in the coming period.
Three months ago, Uzunov said the lenders would need to adapt to market conditions so that persons who need a housing unit to be creditworthy, as the population medium wage is increasing and is directly influencing the demand for real estate products.
Calin Bucur, consultant at Residential Department at Colliers International and the head of the team that set up BREI indice (Bucharest Real Estate Index), said BNR’s decision was an important step in the path to unlocking the residential market, yet not enough if we were to consider the gloomy forecasts for the next two-three months.
“The confidence in the market of end-users must be restored, and they should use the utmost of the new credit rules, and the banks should be stabilized. However, things don’t happen over the night”, Calin Bucur added.
On the other hand, representatives of Credit Team loan brokerage firm highlight the importance of eliminating the stress test, which was designed to determine a certain credit rating afferent to scoring used by lenders when they review the loan applications. The credit report also determines the indebtedness degree.
“The removal of the stress test will definitely have a positive impact on buyers who wanted to buy dwellings and were drawbacked by this test. The fact that borrowing will become possible for high amount of debt for which the applicant to be qualified for, will be helpful also for those stand-by buyers whose credit reports were qualified only for low amounts,” said Anda Marian, Head of Residential Department at MediaCity real estate advisory firm.
Once with the amendment of the new mortgage rules, she said, most of the end users who were unable to contract loans, or just waited for the market confusion to vanish, will resume procedures for house acquisition, especially given the price fallout and special offers existent in the market. They will focus on real estate projects near to completion deadline, such as finalized constructions or near to delivery.
“However, the financial-economic context that caused these measures, remains, and this is not the best time to make medium to long term plans or investments. This is why the clients’ behavior in selection and acquisition process will remain cautious”, Anda Marian concluded.
BNR board said on January 15 it would eliminate the stress test for mortgage loan applicants, but maintained the regulation on calculating the 20% margin of incomes declared previous year at the Revenue Office.
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