Bankers transfer fees into interest rates

Bankers made new loans to individual customers more expensive in September for the third consecutive month, with the average interest rate climbing by more than one percent both for mortgage loans in euros and for consumer loans in RON, to 5.7% and 13.8% respectively, show data from the NBR (National Bank of Romania).

Interest rate increases for retail loans were kicked off in July amid a worsening economic situation, as well as amid banks seeking to cover costs with implementing Ordinance 50, which sets out more transparent terms for loans. The Ordinance has also capped the number of fees that can be charged by banks, so at present bankers are seeking ways to transfer the value of the fees eliminated into the structure of the nominal interest rate.
"The volume of sales has fallen, fees are down and the only way to rebalance revenues remains to increase interest rates. Even if the law eliminated all fees, it would not mean that we are rid of them. Lenders have structured their revenues in a certain way and the elimination of fees would mean revenue losses that would need to be transferred elsewhere," comments financial analyst Aurelian Dochia.