Will housing rates rise this year? As we have already seen, the year 2022 is quite hectic, even if the pandemic has passed. A war has broken out on our border, and all these events do not only affect us personally, they have an impact in all sectors, even in the real estate market. So, is there an explosion in housing rates? Will apartment prices plummet?
You will receive answers to all these questions from Dana Lixandru, Managing Partner Kingstone, in discussion with Adrian Rus, real estate expert and owner of RE / MAX ACTION. This material is especially addressed to those customers who have bought or want to buy an apartment and want to know more about financing options .
Can we expect major imbalances in the credit market?
In principle, we cannot expect major imbalances because banks and customers have not reported a stagnation in lending activity. Lending offers are still competitive. Still, fixed interest financing is recommended, being secure during this period.
What is the difference between financial pre-approval and simulation?
Aqua City customers are currently in the sale promise stage and have already seen several simulations, as well as financial pre-approval processes. What is the difference between the two?
The simulation involves a pre-analysis in which the client's classification for the requested amount is verified. It is purely indicative and is subject to a financial simulation. Obtaining a financial approval can take between one and six months. Thus, the increase of the indicator can affect those who have a pre-approval, so their interest will change to the variable interest loans, but also for those with ongoing loans or for those who are going to sign.
Can the pre-approval (more precisely the conditions) be changed by the bank? What happens if the pre-approval expires and the interest rates increase?
The financial pre-approval can be valid between 30 days and 180 days, depending on the bank where the request was made. If the pre-approval expires, a new credit file will be submitted to the bank that has the best offer at the time of submission. Interest rates have risen slightly recently due to inflation, but compared to existing inflation, which has a value of 14.5%, they are very good. At this moment, the fixed interest rate oscillates between 5.7% and 6.5% per year for RON loans and around 4% for EUR loans.
Will apartment prices plummet?
Despite the pandemic and even the border conflict, prices have not fallen, on the contrary. Therefore, those who have already collected an advance should follow their initial plans to buy an apartment, not give up at this time. In addition, rental prices will rise. For those who buy the first property, the advance is 15% at this time. For those who already own a home, the advance has increased to 25%.
Is a real estate market crash?
It is hard to believe, given that many developers no longer build and good land in Bucharest no longer exists. Compared to 2008, the banking system is very well positioned, and the lending was done in conditions of maximum prudence. In addition, the level of income and the level of financial education of the population have increased. Prices are not at the level of 2008 either.
How much can the rate increase for a loan of 350,000 RON?
For an outstanding loan with this value, with an interest margin of 2.5 and the IRCC with a value of 1.86, the rate for this amount, for a period of 360 months, will be somewhere around RON 1,744. From July 1, 2022, the IRCC will be 2.65%, and the rate will increase from 1,744 to 1,911 RON. Customers with variable interest loans can opt to refinance the loan at a fixed interest rate. They are not obliged to take loans with variable interest; thus avoiding fluctuations during this period.
You can contact either the loan broker or the bank directly to see what options are available. The income analysis, the real estate evaluation will be done and a new mortgage contract will be signed at the notary's office, through which the mortgage can be moved from one bank to another.
For a loan of RON 350,000, the moving costs are approximately RON 2,500. A mortgage loan can be refinanced countless times.
Is it possible that a bank does not approve a file if the developer does not yet have the functional utilities in the apartment?
In the case of Aqua City you can find out more about the state of the works in June 2022 . The first block has already received its tenants and Block 2 will be completed in December 2022.
In general, banks also accept situations in which the connection was made on the ground floor and do not require that each apartment benefit from the same conditions from the beginning. In the case of individual houses, things may be different, but for developers, this is not a problem. If the block is connected there will be no problems. Only the gas connection contract will be required.
In addition, the meter supplier cannot start delivery until he receives the individual cadastres for each apartment.
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