A windfall tax on Bulgarian banks: will mortgages get more expensive, and what the BNB's August data shows

On 23 September 2026 Bulgaria's Ministry of Finance presented the tax changes that accompany the 2027 budget. Alongside higher property tax valuations and a new VAT registration rule for sellers of new buildings, the package contains a measure that reaches mortgages indirectly: a one-off 33% tax on windfall profits earned by banks and several other sectors.

Two days later, on 25 September, Bulgarian National Bank Governor Dimitar Radev came out against the measure, warning that part of the burden could be passed on to borrowers. The same day the BNB published its interest rate statistics for August. Here is what has actually been proposed, what each side says, and how to read it if you are about to take out a mortgage.

What the draft proposes

As presented by Deputy Finance Minister Lyudmila Petkova and reported afterwards:

• scope: banks, insurers and reinsurers, telecoms, currency exchange bureaus, fast-loan companies and food retailers with five or more outlets. Energy, manufacturing, transport and agriculture are excluded;
• base: for each company, average taxable profit over 2020–2025 is calculated and increased by 20% as "normal growth". Profit for 2027 above that threshold is taxed at an additional 33%;
• duration: one-off, for 2027 only, with around 90% of the tax payable in advance during the year;
• expected revenue: roughly €1.035 billion.

According to Petkova, bank profits grew by 588% over the reference period, and the tax also serves as an anti-inflation measure. This is a draft: public consultation, the Council of Ministers and a parliamentary vote alongside the budget are still to come.

What the central bank says

Radev's point is not that bank profits deserve protection, but that the question "how much will the budget collect" is only half the picture. His main arguments:

• The cost can be passed on. "Raising taxes has a cost" — when financial intermediation is taxed, banks can respond by changing rates on loans and deposits, tightening conditions or restructuring their assets. For households, that means more expensive or harder-to-access credit.
• Profit is capital. Retained earnings are banks' main domestic source of capital — what they use to take risk and lend, and their buffer in a crisis.
• The reference period is unusual. 2020–2025 spans the pandemic and a period of exceptionally low, then rapidly rising, interest rates, which makes the comparison debatable.

The BNB is calling for a full impact assessment — on capital, lending rates, credit and growth — before a final decision is taken.

What the August data shows

While the argument goes on, the price of a Bulgarian mortgage has barely moved. According to the BNB's interest rate statistics for August 2026:

• average rate on new housing loans: 2.42%, a fraction lower than July's 2.43%;
• APR: 2.81%, up 0.05 points on the month;
• new business: €621.7 million, down 6.5% on July but 1.6% higher than a year earlier;
• renegotiated and refinanced housing loans: €136.8 million, down 2.9%.

The outstanding stock of housing loans reached €19.33 billion at the end of August, up 25.2% year on year, against 25.7% in July. Growth keeps slowing but remains very high.

One detail is worth noting: the gap between the APR and the interest rate is widening — 0.39 points in August against 0.34 in July. Besides interest, the APR includes the fees and mandatory costs of the loan (though not notary and land registry fees). So when you compare offers, look at the APR, not just the headline rate.

This follows on from our piece on the ECB's September decision, where we looked at the July figures: despite two ECB hikes this year, the average Bulgarian mortgage rate has hardly moved.

Will mortgages get more expensive?

This is where we move from facts to our own assessment.

Not immediately, and not automatically. The tax applies to 2027 profits and the draft has not been adopted. Bulgarian banks set mortgage rates using their own methodology, linked mainly to the cost of deposits, and so far they have not passed on even the ECB's increases.

But the risk points upward. The rate, the fees and the approval criteria are the three levers a bank can use to offset a higher tax. The BNB's warning is that the effect may show up not only in pricing but also in stricter lending — a more conservative view of income or of the property's value.

The scale is modest, but it adds up. As a reference point: on a €200,000 loan over 25 years, the monthly payment at 2.42% is about €889; at a rate 0.25 points higher it is about €915. The calculation is illustrative, not an offer; you can test your own scenario with our mortgage calculator.

What to do if you are buying with a mortgage

• If your purchase is close, do not delay it because of the headlines. Today's terms are known; the terms after the budget is adopted are not.
• Compare offers by APR and by the fixed-rate period. A fixed rate for the first years reduces your exposure to changes decided later.
• Read the rate-change clause. How the variable component is set, and when the bank may change it, determines how much any future increase will affect you.
• Get your profile in order. If lending tightens, borderline cases go first: a high debt-to-income ratio, income that is hard to document, a valuation below the agreed price.

What happens next

The budget and tax bills still have to be tabled in Parliament, where the wording may change. The ECB's next monetary policy meeting is on 29 October, and the BNB will publish September's interest rate statistics at the end of October. We will follow both.

In short

The government proposes a one-off 33% tax in 2027 on profits above the 2020–2025 average plus 20%, for banks and several other sectors. The BNB warns that part of it could reach borrowers through higher rates or tighter conditions. For now the data shows no increase: in August the average rate on new housing loans was 2.42%, with an APR of 2.81%.

If you are planning to buy with a mortgage and want to work out when and how to apply, call us or visit our office. We will go through your budget and your financing options with you.

Based on BNB data (interest rate and monetary statistics for August 2026, published 25 September 2026), the BNB Governor's statement of 25 September 2026, and reporting by BTA, Sega and Glasove.com on the Ministry of Finance draft of 23 September 2026. Verified as of 28 September 2026. The draft may change; this article is not financial or tax advice.