Mortgages in Bulgaria: experts expect costlier loans, but no price crash

On Bulgaria's housing market, the cost of credit may soon matter more than property prices themselves. The European Central Bank raised its key rates twice in 2026, in June and September, by 25 basis points each, and markets expect another increase in December, Economic.bg summarized on Oct. 21, 2026. The average interest rate on new housing loans in Bulgaria was 2.42% in August, according to the Bulgarian National Bank (BNB). More than half of property purchases are financed with a mortgage, and ERA Bulgaria estimates the share is even higher in Sofia and other large cities.

Real estate expert Yavor Kostov said on Bloomberg TV Bulgaria's "V razvitie" program on Oct. 22, 2026, that rate hikes by the ECB and the US Federal Reserve could make mortgage deals harder. "Interest rates may rise for other reasons too," he said, pointing to the country's risk profile, which could increase if governments keep running deficits. Kostov sees no grounds for a deep crisis: price growth has slowed, with some Sofia districts still climbing and others flat or slightly lower. "The more realistic scenario right now is that prices for specific properties and locations freeze," he said. Typical buyers today are families looking for a bigger home, and banks are actively financing purchases.

Miroslav Vladimirov, a board member of ERA Bulgaria, outlined three scenarios for 2027 to Economic.bg: in the most likely base case, mortgage rates rise by about 0.5 to 0.7 percentage points; in the risk scenario they reach about 3.5% or more. "We are concluding fewer and fewer deals at ever higher prices, and that is the unsustainable state as of today," he said. According to the Registry Agency, 45,312 property deals were registered in the third quarter of 2026, 22.1% fewer than a year earlier; according to the statistics institute NSI, home prices rose 15.5% year on year in the second quarter. The own funds needed for a 70-square-meter two-room flat have risen from about 22,000 euros in 2020 to about 50,000 euros today, according to calculations by Ivaylo Valchev of First Investment Bank cited by Economic.bg.