Mortgage and real estate loans continued to slow down in May for the sixth month in a row, with the monthly increase down to a mere 195 million RON (53 million euros), from the 1.1 billion-RON (337 million-euro) peak reached in November last year. However, the volume of loans granted in May this year is slightly higher than the level recorded last May.

At the end of May, the volume of loans for real estate investments had reached 16.5 billion RON (equivalent to 4.5 billion euros). However, this volume only accounts for classical real estate loans, since the NBR (National Bank of Romania) includes mortgage-backed personal loans in the consumer loan category.

"The slowdown was prompted, on the one hand, by the trend of mortgage lending costs, and by financing conditions imposed by banks. On the other hand, the trend of the real estate market has led to expectations of a decline in prices, so that some clients decided to put off contracting loans," says Dorin Cojocaru, senior partner of consulting firm DTD Team and former retail loan manager of BCR.

According to him, banks toughened lending requirements even before the introduction of the new NBR regulations, in order to reduce the risks incurred. Although restrictions have mostly targeted (consumer) loans, which do not require assets put up as collateral, real estate loans are now more difficult to get, as well.

"The implementation of the new NBR norms will continue to slow down the growth rate of consumer lending. On the real estate market, liquidity will, at best, continue to be low," adds Cojocaru. Most analysts and bankers say the real estate market currently has a wait-and-see attitude. The higher cost of lending and the toughening of lending requirements have led to a significant decline in the activity of speculators, who had fuelled the explosive price surges seen on the real estate mark