Real estate, the "pillar" of lending - BoA: Albanians "abandon" borrowing in euros
Lending volumes have halved compared to the record flows of the end of last year. Although the market has entered a more measured phase, real estate remains the main engine of the economy, with citizens increasingly choosing Lek loans to secure their homes. While businesses have curbed large investments in property to focus on daily needs, individuals are demonstrating a clear orientation towards long-term investments and the safety of the currency.
The latest figures from the Bank of Albania show that the volume of new loans has decreased from around 62.2 billion lek in December, to around 28.2 billion in January. This slowdown is seen as a natural phenomenon, as large projects are financed at the end of the year, the first month of the year serves both citizens and businesses to review their financial plans.
Although overall activity has declined, interest in real estate remains the main pillar that keeps lending afloat. For many Albanian families, buying a home continues to be the number one priority. During January, individuals received about 3.5 billion lek in new loans for housing alone in the local currency.
What is striking is the increased caution of citizens towards the currency. While the loan in Lek for housing is holding up well, that in Euro has suffered a sharp decline, dropping to around 444 million Lek (from over 1 billion in December). This indicates a change in behavior, citizens do not want to take risks with exchange rate fluctuations and are looking for safer installments in Lek.
On the other hand, businesses are showing more restraint. After closing a December with massive investments, where euro loans for real estate alone reached record figures of over 16.7 billion lek, in January this momentum has decreased to around 1.9 billion. The private sector is now focusing more on working capital and overdrafts to maintain daily activity.
In addition to property, January has also been a quiet month for consumer loans. Few citizens have turned to banks for daily needs, confirming that credit in Albania is mainly going towards investments that create ownership and long-term security.
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