"No more unlimited home loans" - July 1st, ceilings on the value of loans we receive from banks come into effect
Citizens will no longer receive unlimited loans from banks. The decision to set ceilings on the value of loans that banks grant for home loans has come into effect as of July 1.
At the beginning of May, the Bank of Albania made a decision that provided for the limitation of loans that banks provide to citizens to purchase a first or second home.
Specifically, to buy a first home, commercial banks will not provide loans of more than 85% of the value of the home. For example, if a citizen wants to buy a house priced at 10 million new lek, the bank can finance a maximum of 8.5 million lek, while 1.5 million lek will be covered by individuals with their own income.
Meanwhile, for second homes, commercial banks will not provide loans of more than 80% of the price of the apartment. For example, if a citizen wants to buy a house worth 10 million lek new, the bank can finance a maximum of 8 million lek, while 2 million lek must be provided by the individual himself.
On the other hand, for loans taken out in foreign currency, the ceilings will be lower than those in lek. The bank will cover 75% of the value of the first house and 70% of the value for the second house. The loan is lower to avoid exchange rate risk.
So, if a citizen wants to buy a house worth 100 thousand euros, the bank will give a maximum loan of 75 thousand euros and if it is a second home, 70 thousand euros.
In addition to the loan ceilings, the Bank of Albania also imposed restrictions on the share of the loan in the citizen's income. Thus, the installment must be 40% of the borrower's income for lek and 35% for foreign currency.
While for a second home, the loan installment should be no more than 35% of total income and for a foreign currency loan, 30% of total income.
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