IT IS CERTAIN that mortgage loans have encouraged the real estate market but, on the other hand, they have artificially inflated the cost of buying a flat, Zeno Kezman, vice resident of the National Association of Real Estate Offices in Slovakia told The Slovak Spectator in a short interview.
The Slovak Spectator (TSS): Did the launch of mortgage loans in Slovakia in the late 1990s enliven the real-estate market?
Zeno Kezman (ZK): When banks started offering mortgage loans, every reasonable man interested in buying real estate but without cash on hand wanted to use one. That is why the reply to the question is definitely yes, but it is only due to the fact that they exist. If they were not on the market, people would find other ways of trading real estate.
TSS: Was the influence of mortgages beneficial to the market?
ZK: The availability of mortgage loans, in fact, has caused an unrealistic hike in real-estate prices. Let's ask: If there were no mortgages, who and how many people would have been able to afford, with an average salary of Sk15,000 (€373), a three-room flat in Petržalka [a part of Bratislava] for Sk1.8 million (€44,800)?
This means that mortgages are positive on the one hand, but they support creating prices that are not adequate for the overall economic environment in this country. Of course, we mean Bratislava and larger Slovak towns. If someone wants to live in, let's say, Veľký Krtíš [a small town in southern Slovakia], it is not a problem to purchase a beautiful three-room flat for Sk400,000 (€11,000).
TSS: Are sellers willing to enable buyers to use mortgage loans to buy property?
ZK: Today about 90 percent of real-estate deals are carried out through mortgages. Sellers have realised that there is no other way and those who look for a different type of financing (cash) are usually not able to sell.
TSS: Which changes in the legislation concerning mortgage loans or bank policy would you welcome in order to further develop the real-estate market?
ZK: To minimise risk, banks are very cautious in providing mortgages and they require quite a lot of guarantees, documents, and bureaucratic steps from clients. However, as far as I know, there are important changes in this area and, for example, notarial deeds are no longer needed. I think that competition among banks can create a healthy environment for the gradual improvement of products and services. Competition is the right engine and is not replaceable by any law or directive. A client needs money quickly and of a certain amount and a bank has to find the most appropriate procedures to provide it; but, of course, at the same time it has to have guarantees.