New rules introduced by the Bulgarian National Bank (BNB) that affect mortgage lending conditions came into effect on October 1, 2024. The main changes focus on tightening the creditworthiness criteria for individuals and aim to limit financial risks for both borrowers and banks.
First, the new requirements impose a maximum mortgage term of 30 years, limiting the previously longer terms. periods (up to 35 years). This practically means that monthly payments will increase, since the same amount must be repaid in a shorter period. However, in the long run, customers will pay less interest, which makes the loan cheaper overall.
Another important change is the limitation of the borrower's debt-to-income ratio to 50%. This means that the monthly payment on all loans cannot exceed half of the client's net monthly income. Under these new rules, some borrowers will not be able to take out the same large loans that they could before, which may limit access to financing for more expensive properties.
The changes are expected to have a deterrent effect on riskier borrowers and lead to a slight cooling of the property market. This could particularly affect those who rely on a combination of consumer and mortgage credit to finance their home purchase. As a result, they will be required to make higher down payments or have better financial stability to meet the new requirements.
Despite these tight conditions, analysts say demand for housing loans and property investment are likely to remain robust, especially in major cities where prices continue to rise. However, households will need to be careful in planning their spending and repayment options to avoid financial hardship.
