The Bulgarian National Bank has taken a decision to restrict mortgage lending. The Board of Directors has decided to increase the capital buffer for banks’ risk loans from 0.5% to 1% from 2021. The measure aims to ensure that vaults have sufficient reserves to cover losses on non-performing loans. As a rule, the buffer is increased when it is necessary to “cool” a large increase in credit.
For the first 7 months of the year, new loans in the country increased by over 7% compared to 2020, and housing mortgages by over 15%.
The BNB believes that this is dangerous as the concerns are about the accumulation of risks, which may appear in the increase in the volume of non-performing housing loans in the future./BNR
