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How difficult is it to get a bank loan? Lending standards are tightened

2024-10-22 11:08:53Biznes SHKRUAR NGA REDAKSIA VOX

How difficult is it to get a bank loan? Lending standards are tightened

In the July-September period, citizens have applied for more loans in second-level banks, influenced by the need to buy an apartment and cover consumption expenses. The high prices of the housing market have made it possible to afford the purchase of an apartment only through credit and the increase in average monthly expenses to 3.7% more than years, have brought an increased demand for loans.

How have banks responded to this increased demand?

According to a survey conducted by the Bank of Albania, the increase in demand has been accompanied by a higher rate of loan approval. Second-tier banks have rejected fewer loans in the third quarter, driven by the history of the credit register, the history of employment and the stability of the individual in the labor market.

However, this does not mean that the approval of this loan by the bank was a simple process for the citizen. The perception of risk on the borrower's solvency has caused banks to tighten lending standards for citizens in the third quarter of 2024, both in consumer loans and in those for the purchase of housing.

On the other hand, only the increased pressure from competition in the banking system has contributed to the easing of lending standards for individuals. Also, the general conditions and terms for loans granted to individuals were tightened in the third quarter. Higher margins on risky loans and increased collateral requirements (in loans for the purchase of housing) had a tightening effect on credit terms and conditions for individuals.

Even in the remaining months of this year, it is expected that there will be an increase in the demand for loans. Lending standards for individuals are expected to remain tight, both in loans for the purchase of housing and those for financing consumption.


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