Effective October 1st

From October 1, new requirements for banks in Bulgaria when granting and renegotiating loans come into force. Credit standards are changing for loans secured by residential real estate.

The maximum term under the loan agreement should not be longer than 30 years.

The ratio between the amount of the loan and the value of the collateral at the time of granting (LTV-O) should be no higher than 85%.

The ratio between the amount of current payments in connection with debt service and the borrower's monthly income at the time of granting (DSTI-O) should be no higher than 50%.

The central bank specifies that it is permissible to approve or renegotiate loans with parameters that deviate from the introduced requirements, and the total approved or renegotiated amount of such loans in the current quarter cannot be higher than 5% of the total gross value of newly granted or renegotiated credits in the previous quarter.

The introduced requirements are aimed at preventively ensuring the banking system's stability.