The stock of non-government loans in Romania increased by 6.8% y/y to RON232bn (€50.0, 27.5% of GDP) at the end of January, according to central bank data.

The annual growth rate bottomed out to a robust rate after it eased gradually during Q4 (from 7.3% y/y in September to 5.6% y/y in December) alongside rising money market interest rates that are expected to result in higher loan interest rates. The central bank actually hiked the policy rate in January and February, by 25bp each time. 

Retail mortgage lending has gained ground, appearing immune to the expected deterioration of terms on the credit market: it expanded by 14.0% y/y at the end of January (to RON66.6bn, 29% of total non-government loans), accelerating from 13.2% y/y at the end of December and 12.7% y/y at the end of September. In volume terms it keeps growing. 

The government has already made available to banks the guarantees for more retail mortgage loans under Prima Casa programme — the main driver of the credit market in general in recent years thanks to the small (5%) downpayment required under the programme.

Consumer lending accelerated marginally to 3.6% y/y (RON53.6bn, 23% of total non-government loans) at the end of January from 3.1% y/y at the end of December — but the growth rate is rather weak. Furthermore, the volume of consumer loans has decreased constantly since September in response to concerns related to rising interest rates.

Corporate lending also recovered marginally to 3.8% y/y at the end of January (from 2.2% y/y at the end of December) — but the growth rate remains well below the 6.8% y/y advance featured in September. However, demand is expected to tighten amid steady lending terms during Q1, according to the most recent poll carried out by the central bank among bankers.