Home > Blogs > Finance Watch Money matters – the CEE mortgage markets in review AND what’s coming in 2008 2007 was a year of great expectation for mortgage finance in Central and Eastern Europe. A number of banks and brokerages looked to expand beyond their national borders, or from domestic mortgages to products for foreigners. The reality was somewhat mixed. We expected more products to appear in the Romanian market, for example, with banks like Piraeus (which have London offices in addition to being headquartered in Greece), but they didn't materialise. We also expected to see the growing number of products and improvements in rates for domestic buyers to be reflected in the products available for foreigners, but, although this happened, it didn't happen as quickly as we hoped. In some areas we began to see an adverse effect whereby the attractiveness of the domestic markets caused lenders to focus almost exclusively on these easy-to-serve borrowers, rather than on the somewhat more complicated overseas customers. There was a lot of progress in Poland, with banks more geared up to dealing with non-Polish paperwork and applications. Our clients in Spain (yes, we have a Property Secrets in Spain, which brings investment opportunities and analysis to Spanish-speaking investors), still found it harder as you might expect, as banks tend to pick English as a first foreign language. Bulgaria changes Our partner in Bulgaria (Bulgarian Home Loans) added a number of new lenders to its books, and saw an improvement in the reliability of the banks it deals with. There were some tricky incidents where banks changed their lending criteria in the middle of mortgage applications, but Bulgarian Home Loans rose to the challenge and still succeeded in turning round the mortgage applications. We saw a rise in profile of some of the international banking groups, particularly Raiffeisen, which is delivering more and more attractive products, particularly in Poland and the Czech Republic. They are also sticking their heads above the ramparts in Bulgaria and Romania, so it's good for us to see old friends join us in newer markets. Albania bound Last year saw one of the principles in Star Capital Finance (our Czech and Slovak partner) leave the business to set up a property investment and mortgage finance operation based in Albania. Although we're not yet active in that market (see the Albanian market profile [link] for why) we do at least know where we'd start with finance when and if we go in. Star Capital Finance is also one of the brokers looking beyond its borders - it has now entered the Polish market, bringing even more competition. Earlier this year Rednet started Rednet Finance as a mortgage brokerage catering to the domestic and foreign market. This was an interesting move as previously the main brokerage we saw people using was Open Finance, which is part of the same group as Noble Bank and Metro Bank (both banks who have written a considerable amount of business for foreign investors). The relationship between broker and banks looked somewhat unusual to Western eyes, but in reality Open have remained reasonably open, continuing to source mortgages from a wide range of other banks. One disappointment for last year was the difficulty in getting mortgages for self-employed people, particularly where they have complex financial affairs. Noble Bank in Poland proved most adept at this to date, and SCF in Czech. Rapid Finance in Romania is looking to re-invent itself in the coming year with a strong service for foreign investors, including the more difficult ones. We'll wait and see whether they are able to deliver. Also in Romania we've had considerable movement from Volksbank, but have yet to see high volumes of mortgages go through simply. Credit crunch effects The credit crunch happened this year, of course. When we asked the head of mortgage finance at Raiffeisen Poland about this he said that although head office in Austria had said 'be more aware of risk', they didn't believe that it would have any noticeable effect on them, as their funding comes almost totally from savers' deposits and not from interbank lending. This was a story repeated from other partners, where the lack of sophistication and leverage in the CEE mortgage markets appears to be protecting the banks from exposure to the credit crunch problems. We'll wait and see. This coming year we'd expect to see an increase in number of products and improvement in rates in all major markets. As the banks and brokers we work with manage to get finance for more of our clients they are able to streamline the process. Communication and red tape paper work One issue that has been a problem for clients in some countries has been communication. Interestingly we've had complaints from clients about the slow communications of banks and brokers, but we've also had complaints from banks and brokers about slow communications from our clients. There is a certain amount of both happening, with email communication being an exacerbating factor. One development we have scheduled for early January is a way for clients and brokers/banks to communicate in a blog style on our site - so that only the bank and client and ourselves can see the communication, but that all three parties can see a consistent record of what's been said when, and pick up on problems early. We also expect the requirements for paperwork to stabilise somewhat, as we take best practice from one market and transfer it to another. We've already been able to show contracts from one bank to legal departments of others, which has expedited changes in policy. Everything happens relatively slowly, but we feel an acceleration. I will be applying for my first Polish mortgage early next year, having already had one in Slovakia. I will also be applying for a Czech mortgage. I'll keep you posted on how I get on. All the best, and a Merry Christmas to you all. Peter Bennett, Director Property Secrets & i-Property Assets POSTED BY ROBIN BOWMAN ON THU 20TH DECEMBER AT 10:43 GMT [ Back To Blog Home ]

CONTRIBUTORS Robin Bowman Deborah Le Goff Anna Grybel-Kloc Noreen Lucey Nigel Hodges Brett Tudor First Name Last Name Email  BLOG POSTS Sep 2008 Aug 2008 Jul 2008 Jun 2008 May 2008 Apr 2008 Mar 2008 Feb 2008 Jan 2008 Dec 2007 Money matters – the CEE mortgage markets in review AND what’s coming in 2008 Czech your finances Czech VAT rise - Czech VAT rates on new builds to rise in 2008 - what does it mean for investors? Nov 2007 Oct 2007 Sep 2007  DISCUSS Comment On Blog Post  BOOKMARK THIS Del.icio.us Stumble It! Digg This Facebook Reddit

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