The ratio of mortgages in the local loan market is expected to grow in 2008, he added.

More than 54,000 mortgages were granted last year, at an average value of €45,000. “Most of the loans were granted in euro, and more than one third were in Bucharest,” Dragulin added.

Along with an increase in loans granted, Dragulin noted that arrears for loans over €6,000 are also increasing, at a current level of €100 million. He said the growth in the volume of arrears has been “worrisome” in recent months. One reason is that insurers have become reluctant to cover higher risk loans.

Only some 15 percent of loans registered by the Banking Risk Bureau (CRB), Romania’s institution which monitors debtors with arrears, were guaranteed by insurance companies in September 2007, compared to 25 percent in December 2006. This decline could be explained by the decision of several insurers to refrain from guaranteeing risky loans. As such, banks have begun taking the risk directly, according to a recent BNR report.