BT increases down-payment for mortgage loans following debt discharge law

Newsroom 13/05/2016 | 15:43

Romanian bank Banca Transilvania (BT) will increase down-payment requirements for mortgage loans following “higher banking risks brought about by the debt-discharge bill,” company representatives said on Friday. The changes will come into force on May 16.

Down-payment requirements will start at 20 percent for first time homebuyers who apply for a RON dominated loan with an equivalent value of up to EUR 125,000 and about 25 percent for those who do not meet first time buyer requirement. This will go beyond 30 percent for those who want to take out a EUR-denominated loan, the bank has announced.

BT’s announcement is the latest of this kind after several other local banks have made public similar down-payment increases, albeit at a higher average level of about 30 percent. This comes after the debt–discharge or ‘passing to pay’ law has been introduced.

The law enables the discharge of mortgage-backed debts through transfer of the property to the creditor and it is a considerable game-changer given that, under the previous legislation, a home owner was expected to pay back their mortgage under almost any circumstances. Banks have fiercely opposed the law arguing that they will have no other option than to tighten lending conditions.

BT is the third largest bank in Romania based on assets.

Simona Bazavan

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