Slovaks borrow a lot for their housing needs. Illustrative stock photo (source: Sme)
The average amount that an adult in Slovakia owes to a bank amounts to €6,009 – which is a historic high. In 2014 it was €5,226 which is almost €1,000 less.
Slovaks get indebted at a quicker pace and with lower incomes than the rest of Europe. The central bank, NBS, warns that people whose salaries may suffice in the long run to repay debts were attracted by low interests in banks but they will have problems repaying if the currently extremely low interests increase.
Thus, it wants to monitor loans and regulate banks, fearing a potential price bubble in the upcoming months that could weaken the whole banking sector and the whole Slovak economy. NBS considers toughening rules for getting a loan or re-evaluating the amount from the total price of real estate that banks are allowed to lend. Since March, a new law on housing loans has become effective, which makes access to money for mortgages more difficult.
The figures of Slovaks’ indebtedness are expected to still increase, as the interest rates for housing loans are foreseen to keep declining in the next four years, NBS wrote.
