One third of Slovaks delay mortgages past retirment age

The central bank prepared a new project to teach people financial literacy.

The National Bank of SlovakiaThe National Bank of Slovakia (Source: Sme)

Debt generated by people in Slovakia has continued rising despite the pandemic.

The total debt of Slovak households currently represents 47 percent of what the country’s economy produces in one year, or 77 percent of households’ annual disposable income, according to the National Bank of Slovakia (NBS), the country’s central bank.

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Mortgage repayment into retirement age

The largest investment of people in Slovakia is usually a mortgage. Thanks to very good market conditions, their price remains at a record low. Currently, one in two debtors prolong its maturity in order to decrease the monthly instalment.

As much as one third of Slovak households even prolong the maturity after retirement age, often until they reach 70 years of age, the SITA newswire reported.

Even though the NBS admits that interest rates will have to increase at some point, the exact growth will depend on the tempo of economic recovery and inflation.

Attempts to increase financial literacy

One problem the central bank sees is that nearly one third of Slovak households does not understand why inflation is created and how its development impacts interest rates or the sum of a monthly instalment. They also struggle to understand the risks brought on by high indebtedness.

One way to solve these problems is education, according to the bank.

This is why it introduced animated fairy tales, slightly modified from their traditional versions, titled Fairy Tales from 5peniažko, which provide financial advice and tips.

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“We decided to present basic financial tips in a brand new, non-banking way,” said Júlia Čillíková of NBS, as quoted by SITA, adding the fairy tales are very dynamic. “People know the story, so they don’t have to focus on the plot; instead, they can bring their attention to the informative part.”

The target group of these animated fairy tales are people aged 12+, with its content being designed both for children and adults to understand. They will be broadcast by the public-service RTVS, but can also be found online on 5penazi.sk/5peniazko.

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