Source: Financiarul.ro.

Understanding ROBOR: The Key Reference Rate in Romania

ROBOR, short for Romanian Interbank Offer Rate, serves as a crucial benchmark for the average interest rate at which banks lend to one another. This rate is determined by the National Bank of Romania (BNR) through a well-defined daily calculation that averages the interest rates reported by ten selected banks, chosen based on specific performance criteria.

The Impact of ROBOR on Variable Interest Loans

The interest rates influenced by ROBOR pertain specifically to variable-rate loans in Romanian lei. Banks often reference indices such as ROBOR 3m or 6m, among others. For individuals holding loans in lei, these rates are particularly significant, as they directly affect monthly repayment amounts. Recently, there has been a notable increase in these rates, leading borrowers to experience higher monthly payments compared to previous periods.

Factors Influencing Interest Rate Trends

The fluctuations in these interest rates are closely tied to the performance of government bond yields. A rise in ROBOR can often be attributed to a heightened demand for liquidity within the financial system. Additionally, the revenue collected by the Ministry of Finance plays a role in this dynamic. Another contributing factor is the government’s borrowing to address the budget deficit, as well as the outflow of capital from the country.

How Borrowers Are Affected

ROBOR specifically impacts loans in lei that have variable interest rates. The reference values considered by banks can vary based on the type of loan and the repayment history of the borrower. The most commonly referenced rates include ROBOR 3m, 6m, and 9m.

For instance, in the well-known „Prima Casa” program, the interest rate is calculated using the ROBOR rate for three months, plus an additional two variations.

Bank Policies and Rate Adjustments

While banks may apply the ROBOR rate as published by the BNR, they can also opt for a lower rate, but never exceeding the published value. The BNR updates these rates daily, and banks typically revise their interest rates quarterly, basing their calculations on the indices from the last day of the quarter or the first day of the subsequent quarter.

For example, a bank may adjust its interest rate at the end of the year for the first quarter of the following year, using the ROBOR 3m rate from December 31, or the last banking day of the year.

Understanding the New Monthly Payment Calculations

According to current regulations, the bank’s margin is added to the ROBOR value, resulting in a new interest rate applicable for the next three months, which in turn affects the monthly payment. As ROBOR increases, so does the monthly payment, and conversely, a decrease in this index leads to lower payments.

The Broader Economic Context

Is the population entirely at the mercy of banking market conditions? Many are unaware that the BNR possesses various tools to influence interest rate trends. When inflation rises, the BNR may increase interest rates to help control price and interest rate hikes in the market. Alternatively, it can provide liquidity to prevent excessive interest rate increases when banks face challenges in this area.