36
National Bank of Belgium (NBB), the ratio
between the loan and the value of the real
estate (the so-called loan proportion) is about
65%.
Mortgage loans of more than 100%
of the value of the property are rather rare,
which shows that people first use their savings
before taking out a loan from their financial
institution.
Cost
In September 2012, the average weighted in-
terest on new bank loans to Belgian compa-
nies was 2.98%. This interest therefore once
again approaches the earlier historic low of
2.97%,
which was reached in July 2012.
In Belgium, both private persons and compa-
nies may take out a loan at competitive inter-
est rates. Compared to the Netherlands, the
interest rates for all available mortgage loans
and corporate loans are considerably lower (in
some cases nearly 2%).
Reshaping the financial
landscape
That, despite the decrease in demand and the
considerable vigilance, the number of loans
that have been granted has continued to
increase has much to do with the reshaping of
the financial landscape. Since 2007 the finan-
cial institutions have phased out their interna-
tional activities and in this manner strongly
reduced the exposure of the Belgian financial
sector to international risks. Whereas fund-
ing via the financial markets was phased
out, funding via Belgian saving accounts was
increased. Due to these changes, lending in
Belgium could grow continuously.
Sound lending is the engine of a well running
economy. In that context, the financial sector
expresses its concern about the Basel III legis-
lation. One of the things it determines is that
the capital requirements that are imposed on
the financial institutions will become approxi-
mately twice as strict by 2013. This implies
that, if they want to issue the same volume of
loans, they must double their equities. At pres-
ent, an immediate problem has not yet been
established in Belgium, but in the long run Ba-
sel III may have an impact on the availability
and price of the long-term loans. The financial
sector and the government will have to think
of solutions that can guarantee ways of con-
tinuously supplying oxygen to the economy.
Alternative sources
of funding
A number of alternative sources of fund-
ing for companies and projects on a term of
more than seven years, are being studied. The
project bond, which the financial institutions
have discussed with various government insti-
tutions, could offer a solution for long-term
funding.
Project bonds are liquid investments that
are used to fund projects that are known be-
forehand. That may be the construction of a
motorway or of a hospital. The sector is con-
vinced that a public can be found that is pre-
pared to fund sustainable social investments.
Both insurers/pension funds and private per-
sons may be interested in such a product: the
tranche of 1 to 7 years can be sold to private
customers, and the tranche of 7 to 30 years to
insurance companies. It offers the investor a
possibility to diversify. The realisation of such
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PROSPERITY