New BNR Regulation on mortgage loan, in effect as of January 31

'The individuals who want to take a mortgage or housing loan and have incomes in lei will have to pay a down payment of minimum 15% of the value of the home bought through loans in euros and at least 40% at the loans in dollars, Swiss francs or yens,' according to the new regulation of the BNR, which becomes applicable as of January 31, 90 days after being published in the Official Gazette of October 31, 2011.

According to the new regulation, January 31 is a maximal date, and depending on how commercial banks will send BNR their own lending norms for approval, the implementation date of the regulation could be different from bank to bank.

The banks' clients that have incomes in foreign currency and want to take a housing or mortgage loan will pay a minimum down payment of 20% of the home's value.

On the other hand, the regulation stipulates that in the case of consumer loans, the lending period can be of maximum five years, compared with 10 or even 15 years before the issuance of the conditions by the Central Bank.

The conditions for repaying the consumer loan in five years do not apply to re-financing the loans taken previously, the regulation stipulates.

Commercial banks will be compelled to take into account also the risks of a negative scenario in assessing the maximum indebtedness level of clients, which include a possible increase in the exchange rate by 35.5-40.9%, depending on currency of the loan, a potential increase in the interest rate by 0.6% and the possibility for the client's income to decrease by 6%.

The First Home programme is not within the scope of the new regulation, in terms of the down payment for taking a loan.

The loans in this programme will continue to be extended with a down payment of maximum 5% of the home's value, without its value to exceed 57,000 euros.

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