Under the new policy, the Central Bank will introduce a debt burden indicator for the population, measuring the ratio of monthly loan payments to the borrower’s income. Beginning July 1, 2024, loans will be capped at 60% of the borrower’s income, meaning banks will reject loan applications if repayment would consume more than 60% of the borrower’s income. This limit will be further reduced to 50% effective January 1, 2025.
The Central Bank believes that this measure will facilitate a more transparent assessment of citizens’ income, incentivize borrowers to formalize their income sources, and encourage banks to engage in responsible lending practices.
To determine average monthly income, data from the past six months will be considered, encompassing wages, pensions, income from bank accounts, and taxes paid. For loan repayment periods exceeding 36 months, the average income over the same period will be taken into account.
Additionally, for mortgage loans, the loan term will be extended to 180 months, compared to the previous 120 months.
These new requirements will apply to 85% of banks’ loan portfolios. However, banks will retain discretion to issue the remaining 15% of loans without considering the borrower’s debt burden.
