Romania’s National Bank (BNR) plans to tighten lending conditions for individuals.

A regulation project the central bank has drafted aims to cap the indebtedness level of individual clients, namely the ratio of bank instalments to net available revenues, local Capital.ro reported. Thus, many Romanians won’t qualify for taking loans once this regulation is adopted.

The maximum indebtedness level for mortgage loans with variable interest rate will be 40% for loans in local currency and 30% for loans in foreign currencies. In the case of consumer loans, the indebtedness level will be capped to 25% for local currency loans and 15% for loans in foreign currencies, according to the project.

Moreover, banks will have to inform the clients on the impact of a steep local currency depreciation and to show them how much their monthly instalments would grow in the case of an interest rate hike, local Hotnews.ro reported.

The central bank’s officials started talking about the necessity of limiting credit to individuals in September, after a significant growth in lending in recent years. If this regulation becomes effective, it may lead to more expensive loans and lower housing prices.

editor@romania-insider.com