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Bulgaria's Housing Market Surges as Banks Inject Billions in Credit
2 Apr 2024

Bulgarian banks have injected approximately 3.7 billion in additional credit resources into the housing market over the past year alone, with a staggering total of over 8 billion in the last three years, according to Lachezar Bogdanov, chief economist at the Institute for Market Economy, speaking on Nova TV.

Bogdanov emphasized the significance of bank loans for home purchases as a vital tool enabling a broad spectrum of individuals to acquire homes. However, he raised concerns about the pace of credit growth, questioning whether it is advancing too rapidly and with significant leaps.

The economist highlighted recent measures by the Bulgarian National Bank (BNB), including increased requirements for banks' own capital and higher percentages for mandatory minimum reserves. Despite these measures, there has been a notable 22% year-on-year surge in credit extended to households.

Bogdanov pointed out that Bulgarian households and businesses currently hold substantial free resources within the banking system, often in the form of deposits earning minimal interest. This surplus liquidity provides banks with a fresh source of liquid resources that can be utilized for lending at relatively low costs.

Addressing Bulgaria's potential entry into the Eurozone, Bogdanov suggested that the country might marginally exceed the inflation criterion, indicating that full compliance may not be achieved. He raised the possibility of seeking a second evaluation, which could influence the decision-making process.

Emphasizing the importance of prudent financial management, Bogdanov stressed the need for predictability and urged policymakers to maintain the deficit within reasonable limits.

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