HVB Bank Biochim and its sibling bank Hebros stunned the local banking community on Monday, October 3, with an offer for a euro mortgage loan with an APR of 3.9% for the first year. Industry sources said no one expected the cost of mortgage loans to dip below 4% in 2005.
HVB Bank Biochim and Hebros Bank, part of the BA-CA group, are offering 25-year loans denominated in euro. The minimum amount that should be borrowed is the equivalent of 5,000 levs with no ceiling on the size of the loan. Based on the current interest rates, the APR after the first year will be 8.24%.

The Bulgarian central bank does not release statistical data on the home purchase loans denominated in euro but the average interest rate of credits in the local currency is 8.4%. This move will upset the business plans of many banks that have already pulled out all the stops and have nothing to respond with, Dnevnik was told by a top executive from a major local bank.

'Our offer for an interest rate of 3.9% marks a serious push into the domestic mortgage market,' said HVB Bank Biochim executive director Maria Ilieva. HVB Bank Biochim and Hebros Bank will soon be joined by Bulbank after Italy's UniCredit embarked on a merger with HVB. The 3 banks would control 20% of Bulgaria's mortgage market. DSK is still well ahead with 34% followed by United Bulgarian Bank with 20%.

Home purchase loans topped 1.66 bln levs by late August, up 130% over the past 12 months, shows data of the Bulgarian National Bank.