Albania’s central bank sets new mortgage lending limits

Albania’s central bank imposed new limits on mortgage lending Wednesday to reduce credit and currency risks.

Tirana, May 7 (TemA) – Albania’s central bank approved new limits Wednesday on real estate lending for individuals to manage credit risk and currency exposure.

Governor Gent Sejko said the measures set maximum loan-to-value and debt-to-income ratios, and recommend maturity limits for borrowers nearing retirement age.

For loans in lek, loan-to-value caps will be 85% for a first home and 80% for second homes or rental properties. For foreign currency loans, the limits are 75% and 70%.

Debt service ratios are capped at 40% of income for first-home loans in lek and 35% for other properties. For foreign currency loans, the limits are 35% and 30%, respectively.

Sejko said most commercial banks already apply stricter standards, with average loan-to-value ratios around 70%.

“These are standardization measures, not lending restrictions,” he said, noting the bank’s role in monitoring and regulating market practices.