Bulgarians Take on Record Property Loans Ahead of Eurozone Entry

Bulgarians are continuing to borrow unprecedented amounts to purchase property, according to the latest figures from the Bulgarian National Bank. As housing prices remain high, homebuyers are increasingly seeking larger loans to finance transactions.

Credit expert Tihomir Toshev, speaking on Bulgaria Morning, noted that the real estate market has been steadily rising over the past five years, with prices increasing each year. He attributed part of the surge in loan volumes to Bulgaria’s upcoming entry into the Eurozone on January 1, which has created a sense of urgency among buyers.

“People are primarily driven by fear of even higher property prices,” Toshev explained. While low interest rates are appealing, he said they are not the main incentive for borrowing. Since the start of the year, mortgage rates have ranged between 2% and 2.8%, roughly unchanged from the end of last year.

Toshev highlighted that income growth in Bulgaria is outpacing inflation, providing additional confidence for borrowers. In Sofia, he noted, mortgages typically range from 300,000 to 500,000 leva. Most loans remain aligned with borrowers’ income, minimizing risk, he added.

He also pointed out that Bulgarian interest rates are floating, with most borrowers opting for terms of 25 to 30 years. Banks generally base lending rates on average deposit rates, and while market shifts can push rates higher, Toshev said fluctuations are unlikely to create systemic problems.

Looking ahead, Toshev expects the property market to cool significantly after Bulgaria joins the Eurozone. He predicts a decline in transactions of over 20%, describing the current market as emotional and somewhat “hysterical,” with some purchases not representing optimal choices.

“Next year, activity should be much calmer, and the number of transactions lower,” he said. He added that current high demand has not been met with adequate supply, which has limited the scope for negotiating discounts. In the coming year, as supply catches up, buyers and sellers will be able to negotiate more freely.

Toshev also anticipates that Bulgaria’s Eurozone entry will boost investment interest in the country, potentially attracting further foreign capital into the property market.