A SIDE-BY-SIDE COMPARISON The best interest rate for mortgage loans is 5%

Resuming lending is the most important goal for bankers in 2010, as many banks have already cut the interest rates for loans.

BURSA has made a chart with the interest rates for mortgage loans charged by the major Romanian banks, for a theoretical loan of EUR 50,000.

We found that BRD was the bank that offered the best interest rate (DAE - Effective Annual Interest Rate) for a mortgage loan with a 5, 10 or 15 year maturity (5.10%). As such, borrowers who opt for a loan of 50,000 Euros will pay back over 56,000 Euros after five years, and in case they want to pay back the loan in 15 years, the amount paid back will be 69,900 Euros.

Other banks which offer low annual interest rates are Raiffeisen Bank, Volksbank and Banca Românească - less than 5.5% for loans with a 5, 10 or 15 year maturity. In the case of these three banks, for the same amount of 50,000 Euros, the amount which will need to be reimbursed at the end of the five year period, can reach 57,000 Euros, almost 1,000 Euros more than in the case of BRD, while for a 15 year loan, borrowers can expect to pay back as much as 72,000 Euros.

Piraeus Bank has the steepest rates for mortgage loans taken under the "First Home" program. The bank"s Effective Annual Interest Rate is 6.34%, for 5 year loans, meaning the total payment would amount to 58,067 Euros, while for a 15-year loan, for the same amount of 50,000 Euros the borrower would pay back EUR 75,126.

Banca Comercială Română (BCR) charges an Effective Annual Interest Rate of 5.6% for loans in Euros for any of the three maturities, taken under the "First Home" program. For loans taken as part of the "First Home" program, Bancpost has an annual effective interest rate of 5.66%, similar to that of Banca Transilvania, which also exceeds 5.6%.

Even though the interest rates have decreased, people who took out loans over the last two years still pay high interest rates, and arrears are on the increase, due to rising inflation and exchange rate fluctuations, going as far as to reaching two digit monthly increases in 2009. However, in December, the balance of loan arrears decreased over the previous month.

By February, retail and corporate borrowers had accumulated 9.23 billion lei (2.25 billion Euros) in overdue loan payments, up 5.2% over the previous month and double compared to last year"s similar levels, according to data compiled by the Central Bank.

The ratio of overdue loans climbed to 4.6% in February, compared to 4.37% in January and to the numbers of February 2009 (slightly over 2%).

Even though the growth of overdue loans has slowed down over the course of the previous months, analysts don"t expect a stabilization of the bank"s loan portfolios before the second semester.