Interest on euro loans to continue rising

The price of a euro loan contracted in January 2009 could be two percentage points higher than its current level, because banks will not be able to increase commissions for the duration of the loan, and because foreign lenders are raising costs for local banks.

 

“Interest rates for euro loans will continue to increase, and those for mortgages and consumer loans will not drop below an annual 9.5 percent from 14.5 percent,” said Sorin Mititelu, Chief Executive Officer of the Business Development and Retail Products Division of Banca Comerciala Romana (BCR).

 

Considering banks will be prohibited from raising commissions as of 1 January 2009, they will increase the interest on loans, as they must cover the risk associated with variable market conditions throughout the lending period.

 

Mititelu explained that a bank client who has a foreign currency loan with an initial annual interest rate of 4.5 percent now requires an income 40 percent higher to refinance.