The most advantageous choice when taking out a mortgage loan: fixed interest vs. variable. “It would be a possible last train to take this step”

New mortgages granted in the first three months of this year totaled approximately 1.1 billion euros at the national level, increasing by approximately 29% compared to the level recorded in the first three months of 2023, according to a report produced by the financial consulting company SVN Romania | Credit & Financial Solutions, this volume excluding refinancing, conversions, transfers and restructurings.

By the Observator editorial team on 09.05.2024, 16:59

In total, the reports made by the National Bank of Romania (BNR) indicate a volume of mortgage loans granted in Romania in the first quarter of this year of 2.15 billion euros, an increase of over 95% compared to the volume of 1.1 billion of euros reported for the first quarter of 2023, but these also include refinancing, conversions, transfers and restructurings, according to a press release from the remis company, reports Agerpres.

“The mortgage market in Romania has been in a strong recovery for several months, also corroborated with the increase in the number of homes sold, which was almost 19% in the first three months of this year compared to the similar period in 2023. Considering the results from the first quarter of this year, 2024 will be a year with a strong revival, thus preparing the ground for a 2025 that could bring a new record of mortgages granted, depending on the size of the stock of homes for sale and the local macroeconomic evolution. However, consumer confidence has returned to a good level and interest rates continue to fall”, declared Alexandru Rădulescu, managing partner of SVN Romania | Credit & Financial Solutions, quoted in the release.

The best fixed rate mortgage offer on the market: 4.9% interest per annum

According to the quoted source, the growth of the mortgage lending market in the first months of this year was registered in a context where fixed interest rates, the majority in terms of the type of mortgage loans contracted in 2024, registered new decreases, being “broken” and the threshold of 5% per year, the best fixed interest mortgage offer currently on the market being with an interest rate of 4.9% per year.

SVN Credit Romania consultants estimate that variable interest rates will also decrease, most likely in the last quarter of this year, without registering a significant level of decrease, fixed interest rates will remain the most advantageous in the next 12 months.

“For those who have a mortgage with a variable interest rate and have not refinanced to date, at this time it would be a possible last train to take this step. IRCC will decrease, but it will not be the expected level, at least not initially, so so that fixed interest rates will continue to be more attractive, borrowers being able to return to variable interest rates in the future, through a refinancing, when they become advantageous again”, added Alexandru Rădulescu.

In 2023, mortgage loans amounting to 6.4 billion euros were granted

Regarding the results recorded in 2023, BNR data show that the previous year mortgage loans were granted in total in Romania in the amount of 6.4 billion euros, SVN Credit Romania estimates indicating a volume of new mortgage loans granted of approximately three billion of euros, or 46% of the total registered.

The average value of a mortgage loan granted at the national level in 2023 was around 62,000 euros, while the average price at the national level of a property traded through a mortgage loan in 2023 was 85,000 euros, up from 82,000 euros in 2022, according to the company’s calculations. In total, around 48,000 new mortgages were granted last year, compared to a level of around 55,000 new mortgages granted in 2022.