Mortgage lending slowdown in November again

Real estate and mortgage lending further slowed down in November 2006, for the second month in a row.
The amount of these loans in November 2006 rose by only 3.8%, to 7.83 billion RON (2.28 billion euros). In October, mortgage lending had posted a 4.7% increase, and a more than 7% increase in September.
Consumer lending also slowed down last November, with the population borrowing less given the rising financing costs. During 2006, both the NBR and the ECB tightened their monetary policies, so that loans, both RON and foreign currency-denominated ones, became more expensive on the domestic market.
However, the pace registered in November was slightly quicker than the one posted in November 2005, when lending went up by only 3.5%. In December 2005, it slightly accelerated, managing an almost 4% increase.
The slower pace registered last November was triggered by the slower progress of the foreign currency financing, which increased by only 3.3%, half the pace of September. Almost 85% of real estate financing is foreign currency denominated, so that any slowdown on this segment considerably impacts the dynamics of the overall amount. As a matter of fact, RON-denominated lending accelerated in November, expanding by 7.1% against 6.2% in October. This was not sufficient, though, to keep up the pace of the overall mortgage lending.
Mortgage lending had a slightly quicker annualised expansion pace last November, to 55%, as monthly increases, though weaker, stayed above the ones posted in 2005.
RON-denominated mortgage lending maintains a very fast annualised growth pace, though it slowed down in November to 141%, from a peak of 178% in September. Instead, the annualised growth pace of foreign currency mortgage lending slightly accelerated, from 44% in October to almost 46% in November.
Almost 40% of mortgage and real estate loans are concentrated in Bucharest, where the amount of such financing in November went past 3 billion RON (874 million euros).
Thus, the capital city leads by far given that in the other counties amounts are quite modest. There are also considerable differences between counties. There are, though, some counties where real estate financing is not in high demand, while other products have a higher potential.
Bankers expected 2006 to be the year of mortgage lending, which should have gradually replaced consumer finance.
However, the latest data are pointing to a much stronger dynamics of consumer lending, which in November saw annualised growth by almost 90%. Distorted statistics would be an explanation, given that many loans used for the acquisition of a house were contracted under the form of home equity loans.
In 2006, consumer lending rose by 14.2 billion RON, while mortgage lending climbed by only 2.6 billion RON.

Real estate and mortgage lending
Continued to slow down in November 2006 for the second consecutive month
The amount of these loans advanced by only 3.8% to 7.83bn RON against a growth rate of 4.7% in October and more than 7% in September
Last November growth rate was still slightly higher than the one of November 2005
The November slowdown was triggered by the weaker dynamics of foreign currency financing