Battles over housing loans

Banca Romana pentru Dezvoltare (Romanian Development Bank – BRD) – Groupe Societe Generale, the second largest bank on the Romanian market has cut the interests on the housing loans in ROL for individuals by two percentage points from 25% to 23% as of yesterday. On the other hand, BRD does not have any plans for extending the maturity of the loans. “I think no bank of all those to have announced rather long maturities will engage in mass financing, but rather in punctual financing,” says Costica Dragut, head of BRD – SocGen Department for retail banking services and products.
BRD’s announcement about a rate cut comes only a few days after ING Bank presented its project to launch housing loans maturing in up to twenty-five years.
At present, the only standard housing loan is being offered by Banca Comerciala Romana (Romanian Commercial Bank – BCR) for up to 15 years. BCR charges 25% interest for housing loans in ROL.
Analysts are saying the interest is not the only relevant thing about such credits, because they come with a series of additional, more or less hidden costs, incurred mainly in form of commissions.
Although the rates operated by banks are beginning to go down to more affordable levels, the procedural obstacles and the terms the banks impose are still disheartening. The household income level, the life and home insurance required by the banks are additional costs raising the interest by several percentage points. “The banks should tell the clients how much the loan really costs and not just the interest,” Rasvan Radu, Raiffeisen Bank vice-president said.
The fiercest battle among the increasingly more banks starting to offer credits for buying/building a home will actually be fought on the turf of commissions, collateral and maturity.