Development of Housing Loans in Bulgaria
Development of Housing Loans in Bulgaria

Author(s): Gergana Mihaylova-Borisova
Subject(s): Politics / Political Sciences, Politics, Economy, National Economy, Business Economy / Management, Economic policy, Financial Markets, Socio-Economic Research
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: banks; housing loans; Bulgaria; euro area
Summary/Abstract: Proper management of the loan portfolio by commercial banks is particularly important to avoid generating credit risks that threaten the stability of banks and the financial system as a whole. In Bulgaria, after the COVID crisis of 2020, there has been a significant acceleration in the growth rate of banks' loan portfolios, which are expanding mainly in the direction of housing loans. These accelerating rates require close monitoring and even administrative measures and requirements by the central bank to limit the build-up of risks. The analyses housing loans’ dynamics, which are outpacing the growth of other types of loans such as consumer loans and loans to non-financial corporations, which are presumably drawn for productive purposes. The results of the analysis show that the growth rate of hosing loans reached 25.9% in Q3 2024, a growth rate that has not been recorded in the last 15 years since the global crisis hit Bulgaria. Despite its acceleration, the share of housing loans in GDP is still at a much lower level in Bulgaria than in the euro area. Thanks to the BNB's stricter macroprudential requirements, risks in the banking system are being managed, but close analysis and monitoring of the housing loans market should continue.

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