The dynamic development of the credit industry continued throughout 2007. According to a research conducted by Credit Center, the lifting of restrictions by the Bulgarian National Bank at the end of 2006 and the booming real estate market in the country have led to a record growth in mortgage crediting.

The year started with a slow January, but the market quickly picked up pace in February. The volume of mortgage credits was growing each month and hit a national record in July and August.

July and August surpassed even the traditionally strongest months for the credit industry – November and December. This led to the imposing of new restrictions – the Bulgarian National Bank raised the minimum reserve requirements from 8% to 12%.

The new restrictions, as well as the effect of the US credit crunch on the European market, made some Bulgarian banks raise their interest rates.

This was followed by a temporary slow down on the credit market in September, but by October credit started to surge again. As a result, Bulgaria saw a 75% y/y hike in mortgage credits in 2007.

The average credit size grew by 48.5% in 2007 to 38 600 euros. Due to the rising real estate prices the average size reached 42 600 euros in November.

In terms of applicant profile, those over the age of 45 accounted for 17.07% of all clients in 2007, compared with 7.3% in 2006. Most credits were between 20,000 and 40,000 leva in size.

The EUR/BGN ratio stood at 56 EUR/44 BGN last year. At the beginning of the year the euro was definitely the preferred currency, however, in the final 4 months of the year, credits in BGN became more popular.

Clients usually resorted to mortgage credits to finance property purchases, less than 7% used the loan to start construction.

The research also found out that Bulgarians prefer long-term credits. Most banks raised the maximum term of credits from 30 to 35 years. Almost 80% of loans taken in 2007 are for a term of more than 15 years.

Banks also report a growing interest in mortgage crediting on the part of Bulgarians who live and work abroad and wish to acquire a property in their home country. Most creditors offered facilitated application procedures those applicants. As a result, the number of credits withdrawn from Bulgarians living abroad nearly tripled.

Last year the most important factor for people when choosing a creditor and a type of loan was low credit cost – 31.4% of respondents cited this as the most important factor for them. 9.6% chose the loan that enabled them to get the cash sooner. 11.3% insisted on the lowest monthly installment, and 7.8% said the fixed interest rate was the most important factor for them.

As a whole, researchers conclude that the 2007 loan applicant was more informed and more prudent when calculating their credit options as compared to the previous year.