Housing loans: Bank interest rates reach 3.8% in lek and 5% in euros

Buying a home with a loan is the only alternative for many Albanian families to solve their housing problem. That has made housing loans one of the most sought-after products offered by banks, but how do the interest rates on these debts vary?

According to the Bank of Albania’s (BSH) latest report, the interest rate on new loans in lek was 8.9%, while in euros it was 7.9%. The average rates for the whole period for these currencies were 9.4% and 8.1% respectively, showing no change from the average values of the previous six months.

A distinct trend during the period is the rise in the interest rate on consumer loans in euros. Over the last two years, consumer loan interest rates have been lower in euros, while housing loan interest rates record lower values in the domestic currency. At the end of the period, interest rates on housing loans in lek and euros stood at 3.8% and 5.0% respectively.

According to the central bank, in the second quarter of the year banks eased lending standards and increased the approval rate of loans to individuals. According to the banks, the easing of lending standards is linked to increased competition in the banking system and a higher tolerance for taking on risk.

In the third quarter, banks expect demand for loans from individuals to remain high, both for consumer financing and for home purchases.