Illustrative stock photo (source: SITA)
Economists have said mortgage rates in Slovakia could rise by a further one percentage point by the end of next year after some local banks hiked rates following European Central Bank (ECB) moves to tame surging eurozone inflation.
The ECB raised its key interest rate last Thursday, starting a cycle of interest rate growth in the eurozone.
Two banks, VÚB bank and Prima Banka, increased their rates on mortgages just two days after the ECB.
VÚB increased their rates by 0.3 percentage points for all fixed-rate periods (one, three, four, five and 10-years). Its rates now range from 2.89 to 3.69 percent.
Prima Banka increased its rates by 0.20 percentage points for its three-year fixed rate to 1.8 percent and to 2.4 percent for its five-year fixed rate. Its seven-year fixed rate remained unchanged at 2.8 percent.
Mária Valachyová, chief economist at Slovakia’s biggest bank, Slovenská Sporiteľňa, said that interest rates on mortgages could increase by a further percentage point by the end of 2023 to a level of around 4 percent.
But she said it was unlikely they would rise to levels in, for example, the Czech Republic, where rates are above 5 percent, because Slovakia is in the eurozone.
“If we had our own independent monetary policy, as they have in the Czech Republic and neighbouring countries, our rates would also be higher, because we have higher economic growth and higher inflation than the eurozone average,” said Valachyová as cited by the Denník N daily. “However, we are in the eurozone, so rates shouldn’t go that high for now.”
