Brake on the real estate market. The increase in VAT and the fear of the crisis caused the volume of mortgage loans to collapse
Against the background of the decrease in purchasing power and the increasing concerns regarding a new global economic crisis, Romanians are becoming more and more reluctant to take out mortgage loans. This trend is beginning to be reflected both in the dynamics of the real estate market and in the evolution of lending.
Lending has fallen dramatically. Archive photo
The volume of mortgage loans granted annually by Romanian banks, including refinancing, increased almost threefold between 2021 and 2025. However, after the VAT increase to 21% on August 1, 2025, there was a 6% decrease in a seven-month period, according to data reported by the National Bank of Romania. According to these data, the real estate market is, in turn, going through a period of contraction, visible in the decrease in the number of housing transactions.
The trend started in September 2025, one month after the removal of the reduced VAT rate of 9% and the increase of the standard rate from 19% to 21%. Data from the National Agency for Cadastre and Real Estate Advertising (ANCPI) show that in 2024 almost 169,000 homes were traded, 6.6% more than in 2023, but in 2025 the number decreased by 5.4%, to almost 160,000.
In the first eight months of 2025, the market had a similar evolution to that of 2024, with a slight increase of 0.4% to almost 106,000 transactions. But since September 2025, the number of transactions has decreased monthly compared to the same period of the previous year. Thus, between September 2025 and March 2026, 84,242 homes were traded, down 15.8% compared to the 100,097 in the previous similar interval.
On the other hand, in the first seven months of the year, the number of potential buyers contacting sellers increased by 2%, but between August 2025 and March 2026 there was an annual decrease of 8%.
The evolution of mortgage loans in relation to transactions
The decrease in transactions is also reflected in lending dynamics. According to the BNR, the value of new and refinancing loans increased from 21 billion lei in 2021 to 58.2 billion lei in 2025. However, after the VAT increase, the trend reversed: in the first eight months of 2025, loans were granted in the amount of 39.7 billion lei (+29.6% compared to 2024), but between September 2025 and February 2026 their value decreased to 26.9 billion lei, 6.3% less compared to the previous similar period.
A significant portion of mortgage loan volume comes from refinancing, a strategy used when new interest rates are lower than existing ones. Looking at the total balance of housing loans – which more accurately reflects new loans – the increase is much more modest.
Thus, although the volume of new loans and refinancing increased by 177% between 2021 and 2025, the total balance advanced by only 16.5%, from 100.7 billion lei to 117.3 billion lei. The difference of over 7 billion lei represents approximately 12% of the total mortgage loans granted in 2025.
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Representatives of the real estate platform say that a third of those interested in purchasing a home have postponed or abandoned the decision after the tax changes in 2025, although interest remains present, with many waiting for better financing conditions.
Interest rates, relatively stable
Despite the decline in lending in the second part of 2025, interest rates saw limited changes. IRCC reached 5.99% in 2024 and 6.06% in 2025. Annual effective interest (APR) was 7.41% in 2022, 7.9% in 2023, 7.79% in 2024 and 7.48% in 2025.
A survey from October 2025 shows that 22% of potential buyers have postponed their purchase due to the increase in VAT, and 11% have given up altogether. In total, a third of respondents changed their plans.
Another survey, from December 2025, indicates that 43% of respondents expected interest rates to fall in 2026, a trend partially reflected in the NBR data from the beginning of the year.
Inflation and the global context influence decisions
Interest rate expectations were initially supported by the NBR's forecasts of falling inflation, which would have allowed the reduction of the monetary policy rate (6.5% from August 2024). But the outbreak of the conflict in Iran on February 28, 2026 led to higher fuel prices and an upward revision of inflation forecasts.
Inflation reached 9.87% in March 2026, the eighth consecutive month of growth, and the 10% mark could be breached. The NBR revised the forecast for the end of 2026 to 3.9% (±2%), but this target becomes uncertain in the current geopolitical context.
Cost of living and market impact
All these developments take place in a context where the cost of living remains a key factor in purchasing decisions. The Storia index shows that the cities with higher real estate prices are also the ones where residents perceive the cost of living to be higher.
For example, Cluj-Napoca has the highest real estate score (53.47), but a low cost of living score (55.44). Bucharest ranks second in terms of prices (32.29), with an average perception of the cost of living (59.51). Instead, cities like Sibiu, Râmnicu Vâlcea or Brașov offer a better balance between prices and cost perception.
In general, where prices are higher, the pressure felt by residents is not limited to housing, but extends to the entire cost of living. At the same time, prices also reflect access to infrastructure, transport and services — increasingly important factors in the purchasing decision.
