Romania mortgages warning for foreigners

Yesterday I heard rumours that due to the world credit crisis and Romania's own rapid credit expansion the Romanian national bank is tightening up on the ability for Romania's bank to lend to foreigners.

It seems that Bancpost has already "temporarily" (read indefinitely) suspended giving mortgage loans to foreigners.

This is a devastating blow for those looking to a get a mortgage in Romania as Bancpost are (were) currently one of the largest providers.

I have long been very cautious about investing in Romania, especially with so much hype and speculation having taken place there over the last couple of years, and this just furthers my hesistance to invest there.

Mortgage finance has always been very difficult to obtain in Romania for foreigners and even when one does get it the terms are not good at all (ie max 75% LTV and high 7-8%+ interest rates).

Prices are now either stagnant or falling in many Romanian cities after the unsustainable boom and the rental market is shaky at best.

Medium term the market has a lot of potential, but for now I would still not invest my own money in Romania what with high risks, falling prices and poor mortgage finance.

Given the situation of the world economy at the moment I don't see many more Romanian banks jumping over themselves to lend to "risky" foreigners, especially at a time when prices are falling.

Quite the opposite in fact ... I see the ability for foreigners to get mortgages in Romania being very difficult for quite some time to come - despite all the promises I've seen from various companies over the last couple of years.

Romania is a classic specualtive market - where the risks are high and uncertain but the potential rewards good - but now with further restrictions on mortgages in Romania many investors are going to have an increasingly difficult time making their investments turn into something profitable.

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