Moldovans are taking out more mortgages but the number of commercial transactions is falling. The economic policy expert Veaceslav Ionita says that this discrepancy indicates a heightened uncertainty in the real estate sector, marked by the existence of imbalances that influence consumer behavior and market dynamics, IPN reports.
In the weekly program “Economic analysis with Veaceslav Ionita”, the author noted that in the previous three quarters, between 2120 and 2400 mortgage loans were contracted, while in the previous periods the average was below 2000 contracts. If the pace is maintained, the current year will end with 9,000 mortgages granted by banks. “Maybe even more,” the expert said. The volume of mortgage lending has also increased. If in 2015-2016 they amounted to 500 million lei, in the first two quarters of this year already 5.7 billion lei worth of mortgage loans have been granted.
Thus, on the one hand, there is an increase in the number of mortgages and the amount of money allocated for them, and on the other hand, the lowest number of commercial transactions in the last fifteen years. In 2024 there were 23.7 thousand transactions, and in the first half of this year – only 8000.
“I think there are several explanations: some mortgages were contracted outside the Chisinau municipality, which also shows the decrease in the value of a mortgage loan, from 1.4 million to almost 1 million, a 17% decrease. Several transactions, such as sales, purchases, are done through mortgage loans; the house is pledged, but loans are taken for other purposes; unnecessary lending – people, not being able to justify where they have the money, choose to access a mortgage loan, returning it from the money they have at home as savings,” the economist said.
The economic analyst also believes that the number of transactions has also fallen due to excessive regulation in recent times, the fact that very few homes have been put into service, but also due to the increased price of apartments.
The economist says Moldovans are borrowing heavily because interest rates on loans have fallen. While the rate was 16% between 2008-2009, it fell to 7.2% in the second quarter of this year. “Even though the National Bank of Moldova (BNM) has raised the base rate, even though deposits have become more expensive, mortgage loans have practically not increased. 7.2% interest rate is insignificant,” Veaceslav Ionita said.
Until 2015-2017, on average, real estate loans of up to 20 thousand euros were accessed, and in 2021 the average exceeded 30 thousand euros. In the first and second quarters of this year, it reached 69.6 thousand euros, and in the second quarter – 67.1 thousand euros.
If in 2015 a mortgage was the equivalent of 8 years’ wages, in the second quarter of this year – 7.1 years.
The economic analyst notes that banks prefer to invest in the construction sector. While in 2004, 6.4% of the banks’ loan portfolio was for construction, in the second quarter of this year the share rose to 26.8%. Mortgage lending as a share of GDP was at 0.5% until 2005. In the second quarter of this year, the mortgage market accounted for 6.7% of banks’ loan portfolio.
