New lending norms: Loans cut in half, many people no longer qualify

Those trying to get a loan now find that the even if they qualify under the more restrictive criteria set by the new lending norms, the amount they can borrow is down to half.

According to a calculation sample provided by one of the banks that has recently implemented the revised individual lending norms, a client living in a city and earning 8,000 RON a month may now borrow 100,000 euros at most, repayable in thirty years. The value of the loan goes down to 95,000 euros for a twenty-five year mortgage loan. The previous version of the norms allowed the same client to get an 180,000-euro mortgage loan repayable in only years. “Many of the criteria included in the scoring system were imposed by the NBR. The new conditions favour those with very high incomes, living in cities. The maximum indebtedness for clients with 2,000 to 3,000 RON a month, is lower than 50%,” banking sources explained to ZF. NBR modified the Regulation on lending for individuals in August and most banks are now either in the process of getting their own updated norms approved or implementing them. Thus far UniCredit, BCR, BRD, Volksbank, Intesa Sanpaolo and Bank Leumi have announced they are either implementing the norms or are already done with it. Bankers say NBR imposed almost uniform requirements on the market, leaving little room for players to stand out with their approach and the norms versions it approves are very conservative. In addition, some players say that with the scarcity of financing sources even the norms endorsed by the NBR seem too generous, so that they will grant loans by even stricter criteria. Loans with zero or 15% down payment are out of the question. Some banks will not even grant loans in foreign currency at least for a while, so the only option left are the loans in RON. With the new norms, banks are dividing clients into several segments depending on their creditworthiness and the maximum indebtedness may fluctuate a great deal depending on various conditions. In some cases, lending terms are so harsh that clients cannot even quality for a loan. For instance, a client with a 6,000 RON monthly loan that already has credits in progress with instalments at a little more than 1,000 RON a month could get another 62,000 RON loan repayable in ten years before. After the new revised norms were introduced, such a client would no longer qualify for an additional loan. Another bank that implemented new norms has lowered the maximum indebtedness for real estate loans to less than 40% of income for clients with low creditworthiness. One of the very important criteria with the new norms is the client’s history with the bank. Those who have a history with the bank will get much better terms than a newcomer. Moreover, unsecured consumer loans will no longer be available to those clients who have not worked with a specific bank before, so these are one of the hardest hit products by the harsher market conditions.