Apartment in Sofia: the mortgage situation
Until recently, the mortgages seemed to be the toughest segment in the economy sphere that remained no only untouched by the global financial crises, but also faced a slow but stable growth. Compared to them, the consumer loans were among the hardest hit by the crises. In the fall of 2012, the mortgages taken for the purchase of Sofia apartments got their lowest and worst season. For a period of three months being August, September and October, the new Sofia apartments mortgages faced a net decrease or in other words, the repayment of loans exceeded the amount of new loans. That fact was pointed out by the bank institutions, since this happened the first time since the crisis began with this type of money loan. In general, the fall of 2012 marked a weak season in the mortgage market and low interest by the clients. The main reasons for that was the general economic instability and the expected further decline in property prices, as well as the high levels of unemployment and the overall uncertainty in the monthly income. Under these circumstances, the households were reluctant to go for new long term debts.
The banks are still doing their best to attract the investors in Sofia apartments. They present low interest rates both in Euro and in the local currency – the Bulgarian Lev and they further offer a periods of up to five years during which the mortgage will be at a really low interest rate. Other offers provide fixed interest rates for certain periods of time – for one, three, five and even for ten years. At the same time, the bank institutions are ready to abolish or to reduce certain taxes that concern the mortgage application and maintenance. At the same time they preserved the early repayment fee, but are now open to accept that form and do not lay taxes if the repayment is done after the third year of the mortgage period and with own funds.
At that period, the most sought after Sofia apartments, the one-bedroom and the two-bedroom Sofia flats, as well as the studio apartments in Sofia got to more realistic levels. Even so, there are prognoses for further price reductions in 2013 and banks are expected to offer the Sofia apartments they have in their portfolio now. In case that this happens, the mentioned apartments in Sofia will come with better, much lower price and this will further affect the Sofia property prices in general. It is then that many of the households will decide to take a mortgage and buy a Sofia apartment. Most probably, the mortgages taken will be in Bulgarian leva. This, however, will happen only if there are good apartments on the market. As good Sofia apartments are considered those that are set in newly built complexes in neighborhoods with good reputation and infrastructure, low levels of crime and an easy access to facilities and extras that will provide them a good standard of living amidst other people of the same age and social status.