New law introduces limitation on house loans

New housing loans will have to be repaid in a maximum of 30 years in future, said the Ministry of Finance in a press release on Thursday.

The new legislation will also limit loans to housing companies. The President approved the bills on Thursday and the acts will enter into force at the beginning of July.

The reform aims to curb household indebtedness.

In new construction, housing companies will be permitted to borrow at most 60 per cent of the unencumbered price of the flats to be sold.

The maximum maturity period of loans to housing companies will be 30 years; no interest-only periods will be permitted for five years from the completion of the dwelling, except during the first year.

However, the rules are flexible so that a bank will be able, for example, to deviate from the maximum maturity period in ten per cent of lending.

Payment arrangements will also be possible. The legislation does not include a maximum debt-to-income ratio, also called a debt ceiling.