Lending market cools down: Rise of consumer and mortgage lending halves

Consumer credit reached 73.8 billion RON (equivalent to 18.5 billion euros) at the end of last year, a 34% rise, as opposed to the 81% rise recorded in 2007.
Eliminating the impact of the exchange rate and of inflation, consumer credit saw a decline in real terms in November and December. Consumer credit managed to continue its rise at the end of the year, but at much more modest rates than in previous months. The volume amounted to almost 21 billion RON (5.2 billion euros) in December, accounting for a 48% annual rise. In 2007, the rise had amounted to 77%. The National Bank of Romania (NBR) publishes all data in RON, including for credits granted in foreign currency. Expressed in RON, the volume of credits in foreign currency show as being on the rise, according to the NBR, but the advance is explained by the rise in the exchange rate, by 5.5% in December alone. Mortgage credit in foreign currency continued its rise at the end of the year, with the volume in euros seeing a gradual rise from 4.7 billion euros in September to 4.85 billion in December. Credit in foreign currency accounts for over 92% of all financing for real estate investments. “Mortgage credits were taken out, but I expect the demand for such loans will drop significantly in 2009. Loans in foreign currency will record negative annual growth rates, while those in RON – slightly positive rates. Loans in foreign currency need to be expressed in euros, RON figures are distorted by the depreciation of the RON against the euro. Overall, government credit will reach annual growth rates of 5% at the end of 2009,” says Nicolaie Alexandru-Chidesciuc, senior economist at ING Bank.