BRD and Alpha Bank change mortgage terms over debt discharge law

Newsroom 03/05/2016 | 15:31

BRD and Alpha Bank follow suit in increasing the down payments for property credits after the passing to pay law was promulgated by President Iohannis. They join four other banks that have already made this move after the draft bill came into being: Raiffeisen Bank, Bancpost, Intesa Sanpaolo Bank and Garanti Bank.

BRD modified the down payment for RON loans from 15 to 35 percent for loans of up to EUR 250,000, the threshold included in the discharge bill. For larger loans no changes were made.

The bank had already adjusted its down payment for EUR loans from 25 to 40 percent, while the draft bill was still under debate.

Alpha Bank, in turn, has increased the down payments from 15 to 30 percent for RON credits and to 40 percent for EUR loans. The bank has also dropped the Prima Casa program, as the first draft included those types of property loans. The new bill will not apply for loans taken out under the Prima Casa scheme, however.

Alpha Bank has also adjusted its interest rates for housing loans with down payments lower than 40 percent. Thus, the new interest rates for the Alpha Housing Standard loan are:

  • – ROBOR 3M (0.76%) + 3.15% = 3.91% P.A. (if the loan amount is up to 60 percent of the market value of collateral)
  • – ROBOR 3M (0.76%) + 3.40% = 4.16% P.A. (if the loan amount is up to 65 percent of the market value of collateral)
  • – ROBOR 3M (0.76%) + 4.20% = 4.96% P.A. (if the loan amount is up to 70 percent of the market value of collateral)

 

The bill applies for mortgage-loans of up to EUR 250,000, and even in cases where the foreclosure procedure of a debtor has already been completed. It had been sent back by President Iohannis and an adjusted version was finally voted into law on April 28.

According to the approved version, the bill will apply for consumers who took out loans to buy, build, extend, modernize or revamp a home, or for loans that are guaranteed with a residential building.

Central bank governor Mugur Isarescu joined the voices warning against this law, stating that the legal initiatives in the financial sector, which bear the retroactivity principle, pose a “severe systemic risk”.

The government spokesperson Dan Suciu also warned that Romania could lose billions of euros if banks choose to sue the state in international courts over the bill.

Natalia Martian

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