Montenegro Home Mortgage Finance Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

The outbreak of the COVID-19 pandemic had a negative impact on the financial services sector. The individuals' debt and wealth levels were becoming more severe. For individual homeowners, mortgage debt is the single largest source of debt and has the greatest effect on their finances, and their ability to stay solvent through wage decreases or wage losses. For lenders, mortgages are typically the most significant asset on their retail banking book, this resulted in changes in originations, repayment schedules, and default rates will have significant impacts on their profitability and liquidity.

When buying a property in Montenegro, arranging a mortgage can become an issue for some people, and acquiring a loan for real estate from non-residents of the country is not easy. However, the rise in the need to streamline housing lending services and increased disposable income to purchase housing is expected to grow this market during the forecasted period. The country has a stable currency, low real estate tax rates, and the opportunity to obtain residence through property purchase and citizenship through investment, the Montenegro housing mortgage finance market has long been a popular place for investment for many people.

Montenegro Home Mortgage Finance Market Trends

Growth in Tourism in Montenegro is Anticipated to Drive the Growth of the Market

Montenegro is one of the fastest-growing tourist destinations. It is widely known as the country with the best tourism prospects in the region. Ever since gaining independence and a stable government, the country's tourism sector has been in constant growth. Montenegro's tourism grew steadily each year, with an average growth of 9%. Because of the growth in the tourism sector, the whole economy of Montenegro grew by an average of 3,6% annually. The tourism sector accounts for about 20% of the country's GDP and has a substantial impact on the Montenegro home mortgage finance market. Since Montenegro gained independence in 2006, its government became stable and started prioritizing the growth of the country’s tourism and industry. With its astonishing nature and rich cultural background, Montenegro has always had a big tourism potential, which the government recognized and took action upon. This is expected to grow the demand of the market during the forecasted period.

Rise in Housing Prices is Expected to Increase the Dependency on Home Finance

Montenegro is a country in the Balkan region of Europe. It is located between Croatia, Bosnia, and Serbia. It has a mild Mediterranean climate, and the landscape goes from sandy beaches and rocky cliffs to mountainous regions in the interior.

The housing prices have increased marginally which has increased the need for home mortgages in the region to afford to house. Loans grew in a one-year period in this region, and at the end of October 2020, they amounted to €3.21 billion, an increase of 7.3% compared to end-October 2019, and 4.7% compared to end-December 2019 (Euro 3.06 billion).

The structure of total loans by purpose slightly changed in favor of loans for refinancing liabilities to other banks, whose share increased by 2.94 percentage points, from 5.91% (October 2019) to 8.85% (October 2020). These loans amounted to €283.9 million at the end of October 2020, which was 60.8% more than at the end of October 2019, and 57.6% more than at the end of the previous year. Such a trend in loans was to be expected, given the liquidity of the real sector and the population and the difficult possibility of servicing the assumed obligations. While loans for construction and adaptation of buildings decreased (9.53% annually and 11.9% compared to the end of the previous year), housing loans increased so that the amount reached at the end of October was higher by 7.6% compared to October of the previous year and 5.6% compared to the end of the previous year.

Montenegro Home Mortgage Finance Market Competitor Analysis

The Montenegro Home Mortgage Finance Market is a consolidated market with five large companies dominating the market with about 80% of bank lending as residential mortgages.

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