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The risk in construction increases, banks tighten loans for housing purchases

2024-08-15 19:56:51 / EKONOMI&SOCIALE ALFA PRESS

The risk in construction increases, banks tighten loans for housing purchases

The government's series of promises to build sky-high towers seem to have started to scare even the banks, which have started to smell risk in the construction sector. The Bank of Albania reported that many of the private banks have begun to take measures making it more difficult to lend for the purchase of housing.

" The conditions of the offer for loans to individuals were fragmented in this quarter, expressed in their easing for consumer loans and tightening for loans granted to finance housing purchases, " stated BSH in the latest Monetary Policy report.

The rapid expansion of the construction market has created quite a bit of concern in the general opinion about a possible bubble in the sector. This is a risk that now it seems that even the banks have started to feel it.

" The current and expected developments in the housing market are considered by some banks as a key factor in the tightening of standards, conditions and credit terms for loans granted to individuals in this quarter ," BSH declares.

In the last three years, the construction sector has grown at significantly higher rates than the rest of the economy. On the other hand, despite the massive increase in supply from new constructions, prices have followed the same trajectory.

In the last two years, this construction expansion has been strongly supported by banks through housing loans, which have been at historically high levels. But it seems that banks have already started to back away from massive housing lending because of the risks they perceive.

Is this behavior simply a correction from the high levels of the last two years or does it also contain the perception of a possible crisis? This will become clearer over the next three months. While the tightening of credit for housing purchases will continue, the banks are smelling more than just risk./ Kapital.al

 

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