BNR POLL: Banks expect further tightening of lending

The evolution of standards and terms for lending to the population has tightened significantly, according to a poll made by the National Bank of Romania.

At the end of 2008, the requirements for lending to the population have tightened significantly in the entire banking industry, for loans for buying homes or land, as well as for consumer loans.

Forecasts for Q1 2009 are not very optimistic this year, indicating further tightening of conditions for lending, but to a lesser degree.

In Q4 2008, the demand for mortgage loans and for loans in general has dropped significantly, far more than banks expected.

Banks expect that lending requirements will continue between January - March 2009, especially for consumer loans, but at a lesser rate, than they did so far

The Central Bank"s poll shows that demand for mortgage loans saw a sizeable decrease in Q4 2008, caused by the increase of the interest rates and the reduction of the gearing rate, allowed by lenders. However, this evolution might see an improvement because of the Regulation 11/2008 which relaxes the prudential regulations in the case of mortgages.

Consumer loans saw a drastic decrease during the period reviewed by the Central Bank. The most surprising evolution was that of credit cards, for which demand dropped significantly, even though banks expected the number of credit card applications to remain stable.

The survey made by the Central Bank is based on a questionnaire sent to the ten largest banks based on loan market share. The banks" opinions cover the evolution of the lending process of Q4 2008, and their expectations for this year"s first quarter.