“If we were to kill the loans in foreign currency, the mortgage financing would disappear. Of course, there is the foreign currency risk, but we must have mixed elements. Stopping all financing in foreign currency is a grave error,” Isarescu told a banking seminar.
The central bank has drafted a set of measures to limit consumer loans in foreign currency. The new rules stipulate Romanian banks will have to reduce the maturity of consumer loans to five years from 20 currently, while extending minimum guarantees to 133% of the loan’s value.
Moreover, banks will not be able to provide mortgage loans unless clients pay at least 30% upfront for financing in euros and 15% minimum for leu-denominated loans. The down payment for lending in other foreign currency was set at 40% minimum.
Commercial banks have raised several objections to some of the new lending provisions and requested the rules be applied only to consumer loans, leaving unchanged the conditions on foreign currency-denominated mortgage and housing loans.