Loans Expert

he size of the Bulgarian banks’ mortgage portfolio has now equalled consumer credits on their loan books, data of the central bank by the end of June 2008 shows.

Mortgage loans topped 6.765 billion leva by the mid-year mark, compared to 6.802 billion leva in consumer loans.

The share of mortgages in total household loans is up to 41.6 per cent from 25.8 per cent three years ago.

Mortgage lending has outpaced all other banking segments, posting end-June growth rates of 72.4 per cent and 74.6 per cent in 2006 and 2007, respectively. That momentum subsided somewhat to 64 per cent by the end of 2007 and then further to 53 per cent by mid-2008.

The consumer loan share in the banks’ retail exposures stood at 41.8 per cent at end-June versus 56.3 per cent three years earlier.

The segment grew by year-on-year margins of 23.3 per cent and 17.1 per cent by end-June 2006 and 2007, respectively. Consumer lending increased by 47.3 per cent year-on-year in the first half of 2008.

The central bank attributed the robust household lending market to positive trends in employment and income growth.

Mortgage lending is expected to slacken off as higher rates deter borrowers.

The central bank expects domestic credit growth to slow to around 40 per cent by the end of 2008.

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Tags: consumer loans, Loans