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Ministry to review old mortgages

THE SLOVAK Finance Ministry will review how banks re-evaluate interest rates on older mortgage loans, which the state subsidizes at a rate of 6 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 are charged at 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.

The state decided to lower the state subsidy to zero this year after a boom in mortgages emerged.

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.

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