The National Bank of Romania (NBR) reintroduced limits for the maximum indebtedness levels (relative to net earnings) for individuals/families seeking out consumer or mortgage loans.
These debt-service-to-income (DSTI) ratios will become 40% for RON loans and 20% for hard currency starting 2019; as an exception, banks can ignore these limits for 15% of their new clients, as well as for first-home buyers, who can benefit from a maximum indebtedness level of 45% for RON loans. Currently, DSTI could move significantly above 60% in some cases.
On a short term, we expect to see a resurgence in buying activity in the final part of the year, but we don’t expect this to stoke prices again; developers will be rather glad to cash in on their current supply given the prospect of curbed demand starting 2019.
On medium-to-longer term, the impact in terms of prices will be uneven, geared more towards the low and medium-low segments of the residential market; climbing up the price ranges, the impact will be dimmer and might be absent altogether (as suggested by DSTI ratios for those with below-average income).
