SLOVAK households are among the least indebted in the European Union. The National Bank of Slovakia (NBS) presented this fact in its Biatec banking journal in February, attributing this to the short history of the household loan market that began to develop here only as recently as 2003.
“Since then households’ debt has been growing faster than the Slovak economy, as well as households’ income and savings,” the central bank commented.
In spite of rapid growth in loans, the volume of retail housing loans as a proportion of the country’s gross domestic product remains one of the lowest in the eurozone. Similarly, the average loan amount per citizen is the lowest within the eurozone. The central bank ascribed this not only to the low penetration rate of loans but also to lower average household income, which does not permit Slovak households to take loans in amounts typical for countries with higher incomes.
Housing loans dominate the Slovak loan market, making up about three-quarters of all loans. This is slightly below the EU average but above the average in central and eastern Europe.
Although overall indebtedness from retail-type loans as a percentage of GDP is lower in Slovakia than the EU average, the cost of servicing these loans makes up a significant portion of household expenses and the NBS wrote that considering the country’s average interest rates, Slovakia is the “most expensive country" for these kinds of consumer loans within the eurozone.
