Mortgage lending at the end of last year exceeded the 8 billion RON (2.36 billion euro) mark, following a 53% rise against December 2005.

Last year, mortgage lending expanded at a much slower rate than consumer lending, a result, which is in opposition to what bankers expected. In fact mortgage lending only witnessed a small acceleration with the annual growth rate advancing, in real terms, to almost 46% in December 2006 compared with 44% in December 2005. In nominal terms, last year's expansion was much narrower than figures for 2005.

The dynamics was however, influenced by a larger basis for comparison. In absolute volume, lending increased by almost 2.8 billion RON, from 1.9 billion RON. Mortgage lending considerably decelerated in the last quarter of 2006, in line with the overall dynamics of non-governmental lending, which moved more slowly amid NBR's restrictive monetary policy. In December, mortgage lending climbed by only 2.5% against almost 4% in the previous month and 7% in September.

Despite bankers' stating in spring that they were witnessing the end of the consumer lending boom, with mortgage lending expected to overtake it, figures from December indicate a reverse in dynamics. Consumer finance kept up its assertive growth pace (almost 94%) and therefore continued to consolidate its position in the structure of loans contracted by the population - accounting for almost 80%. However, bankers still maintain a positive attitude towards the development of mortgage lending, considering that it accounts for the bulk of the financing contracted by the population on the mature markets.

In fact, several banks as early as the beginning of the year announced significant interest rate cuts for mortgage loans, in a bid to gain a bigger piece of a market they see as generating strong growth. The slower expansion of mortgage lending was also