Home loans, banks ease criteria - BoA survey: For consumer financing, getting a loan becomes more difficult
Citizens will find it easier to get a bank loan to buy a house. According to the Bank of Albania's lending activity survey, in the second quarter, commercial banks are expected to ease lending standards for the purchase, construction or reconstruction of residential real estate, which can be a house, building, apartment or land on which a residential building will be built.
This means that banks will not be too "strict" in the criteria that individuals must meet to obtain loans, criteria which include the income status of the person seeking a loan, their age, employment status, and others.
Lending standards may ease as a result of changes in the cost of funds, bank balance sheets, competition between banks, lower bank risk perception, higher risk tolerance and regulatory changes. In the second quarter of 2025, banks expect demand for credit to be high, both for consumer financing and for housing purchases.
Although getting a loan to buy a house will be easier during these months, granting consumer loans from banks will become more difficult. Lending standards are expected to tighten for loans taken out to purchase goods and services for personal consumption.
In the period January-March, the standards, but also the terms and conditions of lending remained almost unchanged for individuals. The Bank of Albania's survey shows that banks have rejected more loan applications from citizens. This increase in the rate of rejections was caused by banks' policies regarding the required collateral.
On the other hand, higher demand for consumer financing and financing for housing purchases were the main factors that led to the increase in credit demand in this quarter. Also, the general level of interest rates, as well as current and expected developments in the housing market (which may refer to the expectation of a higher increase in house prices in the future), led to higher demand for credit in the first quarter.
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