Raiffeisen, a top five lender in Romania, last week made the surprising decision to require a higher down payment from customers taking out a mortgage loan, even before the debate over the giving in payment bill was resumed in the Parliament. The bank decided to raise the down payment for standard mortgage loans to 35% (lei) and 40% (euros). Romania’s central bank regulations say the minimum down payment for such loans is 15% (lei) and 25% (euros).
“If the law is enacted, something essential will change, because those who take out the loans will no longer be liable before the bank with all their assets. The bank will no longer lend money to a person but finance an asset and will have to calculate the trend of the value of this asset over 10 to 15 years,” van Groningen said.
“Which is why the higher down payment. It’s the same as with financial leasing. The down payment no longer depends on the customers’ creditworthiness but on the fluctuation of the value of the asset.”
The Raiffeisen CEO harshly criticized the bill on the giving in payment saying it radically changes the rules governing the banking system. What is even worse about it is the proposed retroactive application to loans already taken and being repaid, which is being discussed, he added. Moreover, as it is, the bill does not provide clarifications about the status of the First Home scheme and whether the governmental guarantee will remain.
Banks have been criticizing the bill since it first came up last year, warning they will raise the down payment requirements for mortgage loans if it passes. President Klaus Iohannis sent the law back to the Parliament for further debate. The legal and budget committees of the Senate were supposed to resume debating the law on Tuesday but eventually postponed it for week at the request of banks.
It remains to be seen whether other banks follow Raiffeisen suit and raise the down payment requirement before the Parliament passes the bill or wait to see the final version thereof first.
Steven van Groningen is convinced the other banks will raise the down payment requirement in case the giving in payment law passes and, as a result, people will find it harder to get a loan.
Raiffeisen Bank has also decided to keep selling First Home loans for the time being, but hopes to see the giving in payment law clearly specify whether it applies to loans under this scheme or not.
(English version by Loredana Fratila-Cristescu)