Romania mortgages warning for foreigners
Yesterday I heard rumours that due to the world credit crisis and Romania's own rapid credit expansion the Romanian national bank is tightening up on the ability for Romania's bank to lend to foreigners.
It seems that Bancpost has already "temporarily" (read indefinitely) suspended giving mortgage loans to foreigners.
This is a devastating blow for those looking to a get a mortgage in Romania as Bancpost are (were) currently one of the largest providers.
I have long been very cautious about investing in Romania, especially with so much hype and speculation having taken place there over the last couple of years, and this just furthers my hesistance to invest there.
Mortgage finance has always been very difficult to obtain in Romania for foreigners and even when one does get it the terms are not good at all (ie max 75% LTV and high 7-8%+ interest rates).
Prices are now either stagnant or falling in many Romanian cities after the unsustainable boom and the rental market is shaky at best.
Medium term the market has a lot of potential, but for now I would still not invest my own money in Romania what with high risks, falling prices and poor mortgage finance.
Given the situation of the world economy at the moment I don't see many more Romanian banks jumping over themselves to lend to "risky" foreigners, especially at a time when prices are falling.
Quite the opposite in fact ... I see the ability for foreigners to get mortgages in Romania being very difficult for quite some time to come - despite all the promises I've seen from various companies over the last couple of years.
Romania is a classic specualtive market - where the risks are high and uncertain but the potential rewards good - but now with further restrictions on mortgages in Romania many investors are going to have an increasingly difficult time making their investments turn into something profitable.
www.propertyinvestmentinternational.com
Labels: romania mortgages, romania property
posted by Simon Tweddle @ 11:05 AM
4 Comments
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4 Comments:
Simon,
Why did you not expressed your true feelings abour Romania over the last 2 years. Actually you expressed a strong view that Romania is one of the top destinations in the world (you & the company you worked for)
I kept several articles praising Romania from your company, while you worked there. You also had different views when I spoke to you.
I have invested in Romania, based on your recommendations (now struggling to get a mortgage)
It would have helped a lot if you expressed your true feelings before.
Hi Springbok,
Thanks for the comments.
From memory I personnally only wrote one relatively positive article on Romania (correct me if i'm wrong), normally i focused more on CZ.
I was naturally bound to some extent by working for a company promoting Romania, which is one of the reasons why i left in the end, as our ideas were clearly divergent.
I think I always cautioned people on investing in Romania, yes i could see the potential but i could also see the risks. If you attended any of the later seminars we did I normally left the Romania section to someone else (eg SB) as i could not promote it whole heartedly.
Also, if you speak to any of the HNW clients i advised directly then they will tell you that i cautioned strongly on investing too much in Romania.
On the other hand i could have turned out to be wrong ... mortgages could have come easily and the risks of property oversupply and economic problems may not have happened.
Hence normally i said something along the lines of yes there is a large potential but is not without its risks and the market is not as developed as say CZ or PL.
Personally I have not invested in Romania and stated this at the time to anyone I spoke to when asked, as for me it was too risky and the returns did not justify it (a bit like buying junk bonds at full price for a little extra yield).
I'm truely sorry you find yourself in a difficult situation (i know how hard it can be from my own experiences in Bulgaria), though perhaps this is not much solace.
Thanks Simon,
Maybe I have over-reacted due to my high level of frustration over the last few weeks. I have to complete on a Romanian development now. Yes, I now remember that I mainly spoke to other advisors.
I have also bought in Prague (Old Brewery) and Brno - both completing shortly.
I would like to get your advice on Old Brewery and other investments and would like to contact you directly through your company (your website).
Kind regards
I can be contacted at:
simon@propertyinvestmentinternational.com
+44 7917 830084
+44 208 1335657
Just drop me a line and i'll call you back whenever is convenient for you.
I look forward to speaking to you.
www.propertyinvestmentinternational.com
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