If slaveholders could look into the future and see how the mortgage system works, they would immediately begin to lend loans to their slaves. This old adage comes to mind because changes in the Consumer Credit Act affect three million customers, banking companies and fast loans. Bulgarians owe to bands nearly 20 billion leva, which makes 23% of GDP. And the most expensive loans, the so-called fast loans reach two billion leva per year. It was them that sparked the controversial amendments because their interest rates sometime reach up to a thousand per cent.

This highly sensitive economic law has divided politicians from different colours and experts in the industry. One of the changes is the removal of the fee for early repayment of mortgage loans. Some MPs were accused of populism, others of "loan tourism" because this applies also to older loans. So people who have already borrowed loans will be transferred from one bank vault into another in search of more favourable conditions. Such was the situation during the credit boom when the battle for money was fierce and ended up with "deposit tourism". Then the Bulgarians were circling banks one after another in search of higher interest rates. Now there is a risk of a bank to start an aggressive policy of undercutting competitors' prices, and that others, fearing not to lose their customers, might follow it. This is good for the “small man”, but cannot shake the system. That banks will lose some of their profits is clear. That is why the banking industry have opposed the changes and bankers remained silent and did not comment on the new rules for lending. The battle is won but not the war. Therefore, experts are concerned that interest rates will rise and funding for the purchase of property will decrease. For example, if the bank now grants 80% of the price of the home we want to buy, in the new deals it will offer only 50 percent, i.e. we will have to provide the rest of the money ourselves – a quite difficult exercise even for the middle class.

Another amendment in loan lending is placing a ceiling of 50% on the cost of consumer loans. So lawmakers are trying to hit the speculators from the so-called companies for fast loans. "Strike on moneylenders" – that’s how one of the importers of the proposal described it. The usury will flourish, analysts and financiers commented in turn because no one can outwit the market and the imposition of regulations will push many companies to fast loans in the informal sector. People there warn that the time of the “mutri” (thugs dealing with racket) is to return because the people who need small, fast loans will turn to moneylenders and their activity is not regulated. It's like the price of milk which costs 1 leva in the store. The state, however, requires a price of 50 stotinki. You guessed it, the next day there will be no milk. And as demand determines supply, we will buy milk on the black market. The same will happen to quick loans that serve mainly people with a risk profile. Indeed, the purpose of these changes is to reduce frauds with misleading terms as well as impulsive purchases of expensive goods, without thinking of the consequences. The practice in Europe shows that in most countries there is no ceiling on loans, and those which had introduced it earlier are now dropping it.

The devil is in the details. It has been precisely the small fonts in the contracts of banks and companies for fast loans that led to conflicts, disputes, even physical pressure. Because many people do not know what they sign, and at one point it is too late. With their unfair practices they have turned consumers against themselves and are now receiving a punishment. The question is - who will pay the bill at the end.

English version: Rossitsa Petcova