One in two mortgage loan applicants seeks stability of the monthly installments with a flat interest rate

UniCredit Bulbank begins to offer a mortgage loan with flat interest for the first five years. The loan will be in euro and will have the familiar name “First Home“. After the five years elapse the interest will be formed in the standard way.

The decision to offer a flat interest rate mortgage loan is UniCredit Bulbank’s answer to the customers’ desire for more security. According to an online survey conducted by the bank, more than 50% of the Bulgarians who are ready to buy a mortgage loan seek stability of the monthly installments with a flat interest rate.

“Our new offer is aimed at meeting the customers’ needs and increasing their satisfaction with our products“, said Pasquale Giamboi, UCB’s Head of Retail Banking.

Giamboi pointed out that a market of flat interest loans will be developed in this country in the future, his expectations being that as similar products gain popularity the flat rate mortgage loans will account for 20% of the total credit volume. Such is the share in countries like France and Italy. In the UK and Germany the percentage is as high as 40%.

UCB’s forecasts, presented by Mr. Gamboi, are for mortgage loans to register 3% increase next year. “For 2011 we expected a 10% market increase, but the actual increase was only 1.5 – 2%. However, unlike other countries we registered an increase, which shows that we are on a stable market“, he added. With that in mind, last year UniCredit Bulbank increased its market share for mortgage loans from 16.67% to 17.48%.

What do the clients want?

According to UCB’s survey conducted in the first week of September, the strongest reason for people to buy a mortgage loan is to become first-home owners, as nearly 45% of the respondents confided. Over 20% relied that they would obtain a mortgage loan to buy a second home. Other reasons to choose a mortgage loan are: refinancing of another loan, renovation, buying a home for the children.

Almost half the participants in the marketing survey pointed out that their most preferred interest was a flat interest (for a different period, between 1 - 10 years).

As expected, most important for the customers when choosing a loan, is the interest rate – measured as absolute value and as APR. The most preferred bonuses for the customers (each with 26%) are the absence of an examination fee and preferential interest against salary transfer.

The survey also revealed that the respondents are oriented towards cutting down on the loan repayment period. Around 70% of the people willing to buy a loan prefer a repayment term between 10 - 20 years and around half of the respondents choose the shortest term. Proof of the customer’s more conservative inclination is also the fact that again nearly half of them responded they would withdraw a loan of up to BGN 60 thousand. However, the largest share of the respondents said they were looking for financing of up to 85% of the home’s price.

The survey also revealed that a third of the people willing to buy a mortgage loan have already used such a loan. Most often mortgage loans are purchased by people aged 25 – 35, with monthly income exceeding BGN 1,000.

Interesting tendencies are also noticed in the answers of the respondents hesitating to buy a loan. The main concerns of the informants are that due to the economic crisis they will not be able to service the loan. If they have more security, in the form of flat installments and insurance in case of loss of income, they would reconsider about the loan.

Due to the search for greater security on the part of the customers, UniCredit Bulbank decided to offer on the market a possibility for a flat rate during the first five years.

UniCredit Bulbank’s new proposal

The offer for standard mortgage loan in euro with a flat interest rate for the first 5 years will be in force by the end of September 2012. UniCredit Bulbank will make additional interest discounts for customer whose salary is transferred on account with the bank and/or use a new investment product –Pioneer Savings Plan, direct investment in Pioneer funds or Life insurance.

The early repayment fee for the flat interest rate loans during the first 5 years from the term of the loan is 3%, and for the remaining period upon repayment with own funds – 0%.

UniCredit Bulbank facilitates its customers by reducing and optimizing the fees. For all new mortgage loans, upon disbursement, a one one-off fee only amounting to 0.95% is payable, and the management fee is collected every month on the residual amount of the loan.

In addition to the new product, UniCredit Bulbank continues to offer its First Home Standard mortgage loan with a floating interest.

More information for media:

UniCredit Bulbank, Identity & Communications Department

Viktoria Blajeva, Phone: + 359 2 9264 993, wjlj/ebwjepwbAvojdsfejuhspvq/ch

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

More information for clients: UniCredit Bulbank, Call Centre Phone: 0700 1 84 84