Home loan interest rates fall again, hitting a 30-month low in August

2024-10-24 08:26:00, Ekonomi CNA

New home loan interest rates in lek fell again in August, touching the lowest level since 2022.

According to statistics from the Bank of Albania, the average interest rate of new loans for the purchase of housing by individuals in Lek decreased to 3.66%, the lowest level for this year and at the same time the lowest value recorded since February 2022.

The average interest rate of the entire loan portfolio, including balance amounts, remained at the level of 4.56%, the same as in July and at the same time at the lowest level since November 2022.

The drop in interest rates this year is supporting a revival of lending for the purchase of real estate by Albanian families.

The data of the Bank of Albania show that at the end of August the home loan portfolio reached the value of 199.6 billion ALL, an increase of 13.5% compared to the same period a year ago. The new loan disbursed during the first eight months of the year reached ALL 35.6 billion, 15% more compared to the same period a year ago.

At the beginning of July, the Bank of Albania lowered the base interest rate for the first time since 2020, creating premises for further reductions in financing costs.

Meanwhile, the average interest rate of the loan portfolio for housing purchases by individuals in the euro currency remains at higher levels. In August, the average home loan interest rate in euros reached 6.38%, the highest level reported for this year.

However, the average interest for the entire portfolio (for balance amounts) has already curbed growth, reflecting the change in monetary policy by the European Central Bank in the benchmark indicator, the 12-month Euribor.

For August, the average interest rate of the loan portfolio in euros was 5.35%, down slightly from the previous two months.

In the Financial Stability Statement for the first six months of the year, the Bank of Albania underlined for the first time the concern that lending to the economy this year is growing too fast and that it is necessary to slow down the pace of growth.

Earlier, in June, the Bank of Albania decided for the first time to apply a countercyclical addition to the capital adequacy ratio of the banking sector. All commercial banks in Albania must complete this supplement after one year, starting on June 30, 2025. Such a supplement aims to slow down lending, especially in the real estate financing segment./ Monitor Magazine