The mortgage market in Romania is at a much lower level compared to almost all European countries, which is why we always try to find a correspondent that indicates a trend, according to the latest analysis published by SVN Romania.

Therefore, a first aspect worth presenting is the fact that mortgage interest rates in our country have become very close to those in Western Europe and have become more attractive compared to countries such as Poland, Hungary, and very close to those in the Czech Republic.

Moreover, besides the cost of the mortgage loan, the price of properties is a factor that makes a difference and leads to an increase or decrease in purchase appetite, either with the help of a loan or not. Since buying a property should be treated as a long-term investment, we present below the evolution of prices and rents within the EU.

At the European Union level, property prices have shown divergent trends, with 9 out of the 27 member states recording annual declines in December 2023, while the remaining 18 recorded increases compared to the same period of the previous year (December 2022).

The most significant declines were recorded in Germany (-7.1%), Luxembourg (-14.4%), and Finland (-4.4%), while the largest increases were recorded in Poland (+13%), Bulgaria (+10.1%), and Croatia (+9.5%).

Our country is among those that have recorded increases in property prices compared to 2022, registering a growth of +3.7% in December 2023.

All the points presented below constitute indicators that could lead to a relaxation of the current level of restrictions, especially regarding the way the indebtedness rate is calculated, which could stimulate the demand for loans.

- The population's indebtedness rate allows for contracting new loans without creating the premises for generating a systemic risk; the indebtedness rate for newly granted mortgage loans is at a prudent level of only 36%;

- The exposure percentage, represented by the balance of mortgage loans from the total GDP, is only 7.5% in Romania, compared to a European average of 40%;

- The tempering and decrease of inflation, which should motivate investments; the low non-performing loan (NPL) rate in our country, which has reached only 2.39%, being very close to the EU average of 2.2%;

- The solvency of the Romanian banking system, which is superior to the European average, being 22.3% compared to the European average of 20%;

- The profitability rate of the banking sector in Romania is at attractive values for commercial banks, recording an ROE of 21.2% at the end of 2023;

- The interest rate trend is downward, after reaching the peak at the end of 2022. As of March 2023, the lowest market interest rate can reach values of 5.5%;

- The stabilization and announcement of potential decreases in monetary policy interest rates, starting with the second half of 2024 by the European Central Bank. (Photo: Freepik)