Author: Krum Aleksiev, Head of Marketing and Segments at UniCredit Bulbank

2014:

Despite the complicated political and economic environment in the country in 2014, the competition on the banking market has led to better price terms on loans, which was a win mainly for clients. UniCredit Bulbank as one of the leading banks on the market in lending to citizens offered additional benefits for its clients. One of them is the refund of up to 4 monthly repayment installments on the loan, which are invested into an individual account of the client in a voluntary retirement provision fund for their personal pension.

With loans to citizens and households, this year the bank saw an increase in its market share to 14.9%. The market share with mortgage loans increased to 17.8%.

The main reasons for the increased activity of households in the last quarter of 2014 are two – the first signs of political stability and the willingness of some households to improve their quality of life by moving into a bigger home. The most active users remain those between 36 and 45 years old, who already form over 47% of all borrowers. They are followed by the group of those who buy their first home, aged between 26 and 35 years – 33.2%.

Throughout 2014 there was a growth in the submitted applications for mortgage loans of individuals by around 5% compared to the previous 2013. The average mortgage loan size in 2014 is nearly BGN 72,300 – around 4% bigger than in the previous year. The average repayment period of mortgage loans remains 22 years. Only 0.3% of the mortgages in October 2014 are not related to a special purpose but are intended for private use, often used for financing of other transactions.

Despite the willingness of many banks on the market to offer their clients stability in the repayment of their loan debts through a fixed monthly installment, the interest in loans with a fixed interest rate continues to go down against the growing interest in loans with attractive floating interest rates. One of the possible reasons is that consumers expect lower market interest indices in the short-term and the mid-term plan.

This year we saw an increased demand for consumer loans and an increase in the average amount to BGN 8,100 (for comparison in 2013 it was BGN 7,300). On the other hand, we see a growing desire in clients to repay their debts faster, with the average term of consumer loans decreasing from 8 to 7 years.

In July the government adopted amendments to the Law on Consumer Lending, which affect both consumer and mortgage loans. As a result, the banks offering loans to citizens changed their offers entirely, along with the pricing model based on market indices, and achieved simpler conditions and better transparency.

2015:

The positive signals for improvement of the macro-environment and the economic activity, the improved liquidity in the system and the hesitant recovery of the labor market determine the expectations of consumer behavior in 2015. The trend of decreasing interest rates on loans, increased supply and competition between the financial institutions will remain in the following year as well, and households will continue to be cautious in making financial decisions. The expectations are of a slight growth in real estate transactions of around 5%, which will also stir the market in mortgage loans. The outlook for real estate prices is of a minimal increase in the next couple of months.

Further information for clients:

UniCredit Bulbank, Call Centre

Phone number: 0700 1 84 84

More information for media:

UniCredit Bulbank, Identity & Communications Department

Ekaterina Ancheva, Phone: + 359 2 9264 963, flbufsjob/bodifwbAvojdsfejuhspvq/ch

Magdalena Ivanova, Phone: + 359 2 9232 528, nbhebmfob/jwbopwbAvojdsfejuhspvq/ch