Bulgaria’s Housing Loans Among Europe’s Cheapest as Mortgage Lending Hits Records

Housing loans in Bulgaria remain among the most affordable in Europe, with mortgage lending reaching record levels, according to credit expert Tihomir Toshev. Speaking on the program Nova TV, Toshev highlighted that despite a recent slight dip in mortgage interest rates, largely due to a promotional offer from one bank, most leading lenders are keeping their rates stable. Still, Bulgaria and Malta offer some of the continent’s lowest mortgage rates.

In June alone, more than 1.2 billion leva in mortgage loans were granted, marking a record, with the number of loans increasing by 15% compared to the previous year. Toshev also noted that banks in Bulgaria continue to maintain strong liquidity, with deposits growing alongside loans - total savings in the country have surpassed 92 billion leva.

Looking ahead to Bulgaria's upcoming eurozone accession, Toshev predicts mortgage interest rates will stay relatively steady. Banks will likely adapt by using available funds in new ways, focusing on domestic financial indicators that reflect the national economic situation best.

The consultant also commented on recent parliamentary decisions regarding the “main account,” which allows free withdrawals and transfers - up to ten cash withdrawals and three transfers monthly without fees. Although this might save individuals only modest sums, between 6 and 15 leva per month, Toshev emphasized its importance for pensioners and those without existing bank accounts.

A key benefit of the main account is the automatic currency conversion from leva to euros at the fixed rate of 1.95583, starting January 1, 2025. Toshev warned that many people currently exchange levs at less favorable rates (1.97 or 1.98) at exchange offices, and advised opening a main account to secure the best rate.

This fee-free account, introduced as part of a European directive, is designed for individuals who have not yet engaged with banking services. It allows them to receive pensions, social benefits, and make up to ten free cash withdrawals monthly.

Toshev encouraged those without bank accounts to open one promptly, citing it as a practical step to avoid extra costs and ensure favorable currency exchange during the transition to the euro.

The Bulgarian parliament recently passed amendments to the Payment Services and Payment Systems Act, allowing consumers up to ten free monthly cash withdrawals at ATMs or POS terminals of their bank and up to three free credit transfers per month, including online banking transactions.

A payment account for basic operations refers to an account receiving wages, pensions, social security benefits, scholarships, and interest, and does not incur regular servicing fees. This initiative aims to make banking more accessible and affordable, especially for those new to financial services.

Source: Nova TV interview