THE SLOVAK Finance Ministry will review how banks re-evaluate interest rates on older mortgage loans, which the state subsidizes at a rate of six percent.
Banks are earning more money on the older mortgage loans compared to recent ones that are no longer subsidized, the Pravda daily reported.
When mortgage loans started in Slovakia the state decided to support their development by granting the state subsidy. The VÚB bank for instance usually offers loans at an interest rate of 5.5 percent while the older loans more than 9 percent. According to the banks, however, the clients with the old mortgage loans still pay less compared to the clients that are drawing the more recent loans.
However, with the overall decrease of interest rates the state suspects that the banks are trying to profit from the fact that the state guarantees the subsidy on old loans.
The ministry also thinks that lower interest rates could be reflected in savings in the state budget.
Compiled by Martina Jurinová from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.
20. Oct 2005 at 9:22