The Bank of Albania has introduced new limits on mortgage lending for residential property purchases. The measure was announced by Governor Gent Sejko, who outlined the loan-to-value caps for both first and second homes.

“We’ve established a ceiling for housing loans. The maximum loan amount in Albanian lek will be 85% of the property’s value for the first home, and 80% for the second home. For foreign currency loans, the cap will be 75% for the first home and 70% for the second home. These lower ratios in foreign currency are intended to reduce exchange rate risk,” Sejko stated.

He also explained that the monthly loan installment must not exceed a certain percentage of the borrower’s monthly income:

• For loans in Albanian lek, the installment-to-income ratio will be capped at 40%.

• For loans in foreign currency, the ratio will be 35%.

• For second homes, the ratios will be stricter: no more than 35% of total income for loans in lek, and 30% for loans in foreign currency.

These measures come at a time when demand for property in Albania remains high, while loan repayment performance is strong, with 96% of mortgages being repaid on time.