Tihomir Toshev: We expect 15% growth in mortgage loans by the end of the year
The most common loan is around BGN 140,000 for over a period of 25 years, those with higher incomes prefer 20 years, the monthly installment is between BGN 600 and 800.
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The most common loan is around BGN 140,000 for over a period of 25 years, those with higher incomes prefer 20 years, the monthly installment is between BGN 600 and 800.
“The safest way to keep their money is to save in bank deposits. They are guaranteed up to BGN 100,000. This security makes people put their saving into the banking system. In the other countries of Western Europe, people have different tools for saving – life insurance with savings purpose, mutual funds, direct purchase of shares, investments in real estate.” With these words, Tihomir Toshev, Credit Consultant, began his participation in the show “Economy and Business”.
“Little by little, Bulgarians are starting to choose different savings instruments, apart from bank deposits. There is a 20-25% growth in the use of such instruments, if there were no economic crisis, this growth would continue. Mutual funds gained momentum even before the previous crisis – 2006-08, 2015-16 interest in them started to rise again”, commented the expert. “The time to buy a property with a mortgage is when you need it and you know why you will use it. An investment is when you have the entire amount to buy a property. It is important if the mortgage installment will affect the family budget. Mortgage rates are currently very low. We expect this market to report 15% growth by the end of the year, compared to last year”, explained Toshev. “People who want to buy have returned to the market, but those who wanted to buy have withdrawn from the market. There is more demand than supply. The most common loan is often around BGN 140,000 for over a period of 25 years, those with higher incomes prefer 20 years, the monthly installment is between BGN 600 and 800. We see an increase in loans over BGN 300,000 for the purchase of a luxury property, they want to improve their standard of living. Buying is often in the big cities, BGN 2,500-3,000 is the monthly income of the household,” he said. “It is not a good idea to take out a consumer loan, and if you have not saved any funds, very often there is high indebtedness, and a culture of saving is lacking. Up to 85% of the property can be purchased with a mortgage loan, 15% is the self-funding required, and transaction costs are also borne by the buyer. The costs can reach up to 8% of the total value of the property”, shared the guest. “57.15 billion are currently held as savings in the banks, on average about 75% of the property value is paid through mortgage. Interest on loans is not expected to rise. There is a lot of free funds in the banks, households have withdrawn about BGN 25 billion. I expect that interest rates will remain between 2.6% and 3% for mortgages and 4.5% and 6% for consumer loans”, concluded Tihomir Toshev.