NBRM shortens repayment periods for housing and mortgage-backed consumer loans
The central bank lowered maximum loan terms and reduced allowed monthly repayment-to-income ratios to prevent excessive household borrowing.
The National Bank of the Republic of North Macedonia (NBRM) has shortened maximum repayment terms for housing and mortgage-backed consumer loans as part of a preventive effort to curb household over-indebtedness, the central bank announced.
New caps on loan length and debt-service ratios
Under the new rules, the maximum repayment period for housing loans is reduced from 30 to 25 years, while the maximum term for mortgage-backed consumer loans falls from 20 to 15 years. At the same time, the central bank lowered the permitted ratio of monthly loan repayments to a borrower’s income by five percentage points: from 50% to 45% for loans denominated in denars and from 45% to 40% for loans with a foreign-currency component.
"The goal is, preventively and in conditions of a healthy and stable banking system, to limit the risks of excessive household indebtedness and to contribute to sustainable lending and financial stability. The more favorable treatment for citizens who are purchasing their first home remains unchanged," the NBRM said.
Financial expert Prof. Dr. Siniša Naumoski welcomed the move as a tool to rein in rising household debt but warned it may affect market dynamics. "If the interest rate is the same and the loan amount remains the same, that will mean that new holders of this type or loan applicants will have a much shorter term, a larger annuity and a smaller amount of disposable money they would receive from that lending. It is especially important to emphasize that such decisions do not cover those new, young persons who for the first time have an application to buy their own home. I expect all of this to contribute to curbing excessive indebtedness but it could also possibly be interpreted that it will have some effect on apartment prices," he said.
Last year the central bank introduced preferential terms for first-time buyers, allowing banks to grant housing loans with a down payment of 10% of the property value; for second and subsequent housing purchases the minimum down payment was raised from 15% to 25%.
Despite earlier measures, the central bank’s report shows housing loans to households rose by 16.2% year-on-year, while consumer loans increased by 12.2%.
Photo: press material from the event
