Billboards still advertise bank promotions despite the economic recession, but in recent months the advertisements of high interest rates on deposits gave way to an increasing number of ads promoting mortgage loans.

The first time steps towards lower interest rates on mortgages was in late 2009, although there were only a few scattered cases. Since the start of 2010, however, the trend has grown stronger, with several lenders launching big campaigns to promote mortgages, with more expected to join in soon.

"The last time we saw such a widespread change was in October 2008, at the start of the crisis. Happily, this time the widespread corrections are in a positive direction," finance consultancy website moitepari.bg said in its latest monthly overview of the banking sector.

The return of large numbers in bank ads is especially visible now, after a half-year hiatus since the previous occasion such a visual focus on the interest rate was last seen in bank advertising, although at the time the subject matter were deposits.

The active media campaign is clearly yielding results, with finance consultancy firms reporting increased interest from consumers. "The number of inquiries is rising, with customers attracted by the numbers in ads, which are on par with those from before the crisis," the executive director of consultants Credit Center, Tihomir Toshev, said.

It is always a good idea to check for how long the advertised rate is valid – in most cases, that is an initial period of six months to two years, after which the interest rate becomes a floating one.

To take one example, Piraeus Bank’s mortgage loan offer carries an interest rate of 4.35 per cent for loans in euro and 4.75 per cent for loans in leva for the first six months, after which it becomes a floating rate, currently at 8.7 per cent and 9.5 per cent, respectively.

Emporiki Bank offers loans in euro with a fixed interest of 7.9 per cent for the first year, followed by a floating rate calculated at 3.45 percentage points over the bank’s basis interest rate, set at 5.5 per cent for March. Alternatively, customers can choose to pay a floating interest rate throughout, set at 3.25 percentage points over the bank’s basis interest rate, which can change in the future.

A similar offer from Unicredit Bulbank, targeting first-time home buyers, offers a fixed interest rate of 6.15 per cent for the first year and a floating rate for the rest of the period, based on the Sofibor interbank interest rate for a loan in leva or Euribor interbank interest rate for a loan in euro (8.15 per cent if you are taking a 10-year mortgage).

Alternatively, customers can choose a floating rate for the entire period (7.75 per cent for a 10-year mortgage in euro).
In some cases, the lower interest for the initial period is conditional on acceptance of other terms, such as having your salary paid to an account at the bank or use of other products from the bank’s portfolio.

For example, Postbank offers a preferential 7.35 per cent interest rate on its euro-denominated mortgage loan to customers that have their salaries paid to an account at the bank. The interest rate for the rest of the loan’s maturity is floating, now at 8.2 per cent.

MKB Unionbank customers can get a lower interest rate on their mortgage if they use a bank package that offers a current account, a credit card and online banking, among other services. The difference is between 8.5 per cent for leva-denominated mortgages and 7.4 per cent for mortgages in euro with the Comfort+ package, and 10.6 per cent and 9.5 per cent, respectively, for the stand-alone mortgage.

Kapital weekly, issue 12