The payment-to-income ratio (PTI) and loan-to-value ratio (LTV) requirements are macroprudential policy instruments that affect lending conditions. Unlike supply side instruments (capital requirements for banks), PTI and LTV requirements affect the demand side and ensure the sustainability of both borrowers and banks.  

The payment-to-income ratio sets limits on maximum loan payments, which are determined proportionally to a borrower’s disposable income. 

The loan-to-value ratio determines the maximum value of a loan, according to the market value of the real estate used as collateral for the loan. This instrument ensures the sustainability of the financial sector in the event of real estate price reductions and also restricts the formation of a real estate price bubble. 

The PTI and LTV ratio requirements can be changed in relation to financial cycles and may vary depending on domestic and foreign currencies. 

 

 

THE PAYMENT TO INCOME RATIO (PTI)

 

Monthly net income (GEL or its equivalent in foreign currency)	For loans in foreign currency (unless income is in the same currency)	For loans in GEL (or in foreign currency if the borrower’s income is in the same currency)
<1,500	20%	25%
>=1,500	30%	50%

 

 

THE LOAN TO VALUE RATIO (LTV)

 

For GEL loans	For foreign currency loans
85%	70%