It seems that banks are having an increasingly difficult time in these turbulent times. Their calculations at the market and home do not match at all. In addition to the arrears on loans caused by causes that are too well-known to mention again, there is another problem: the crisis fully manifested on the real estate market and the decrease in the prices of real estate guarantees will prevent banks from capitalizing on real estate at the prices that were practiced on the market before the financial crisis.

Mortgage Values Hit Banks

Robert Rekkers, president of Banca Transilvania, told Saptamana Financiara: “The value of real estate collateral has decreased substantially, as we have observed from the latest revaluations. I do not want to put forward an average percentage, but I can say that this leads us to adopt two types of measures, both at the level of individual clients and of companies that hold loans: some must come up with new collateral or resort to restructuring financing.”

It has even reached the point where the real estate collateral no longer covers the value of the loan. This phenomenon is “enjoyed” by banks that had an aggressive lending policy and, in the pursuit of a quick profit, did not take into account a devaluation of real estate collateral. Greed is now showing its fangs and biting hard on those who fell prey to it in the “glory years”.

Real Estate Dips, Banks React

The real estate market is still struggling in agony, and experts cannot establish any trend. Transactions are far too rare to identify a direction. The situation still remains cloudy and unstable despite the energetic statements of politicians, according to which we should remain calm, we have come out of the crisis, and now we live in a country where there is no unemployment, salaries have reached exorbitant levels. This form of prosperity is so subtle that very few manage to realize it.