HNB’s New Credit Rules: Getting a Loan Just Became a Nightmare!
Starting July 1, 2023, the Croatian National Bank (HNB) is slamming the brakes on consumer borrowing with new macroprudential measures. The goal? Slow down household debt growth and protect financial stability. Thought it was tough to get a loan before? Buckle up, it’s about to get a lot harder!
What’s Changing?
HNB has set strict limits: your monthly loan payment can’t exceed 45% of your total income for housing loans, and 40% for other loans. The loan-to-value (LTV) ratio can’t be more than 90%. Plus, housing loans can only be paid back over a maximum of 30 years, and other loans over 10 years.
Exceptions? A Little Bit
Banks can approve up to 20% of housing loans and 10% of other loans beyond these limits, but only if you’re buying your first home or upgrading to a better one. So forget about easy credit for luxury or investment properties.
Real-Life Example
Imagine a couple earning 2,400 euros a month with a property worth 240,000 euros. The max loan they can get is 216,000 euros due to the LTV cap. Their monthly payment can’t be more than 1,080 euros (45% of income). Extending the loan term won’t help because the LTV limit still caps the amount.
Why These Measures?
HNB wants to stop people from borrowing too much and risking financial trouble. Cash loans have exploded from 3.6% to 15.9% annual growth, and housing loans are growing about 10% yearly. People are spending more on debt payments — from 38% of income in 2019 to 41% by the end of 2022.
Banks and Market Reaction
The Croatian Banking Association says this is expected since interest rates have dropped to record lows — averaging 2.91% annually in April 2023. Croatia ranks among European countries with the lowest mortgage rates, just behind Finland, Spain, and Malta.
What’s Next?
These rules will slow down borrowing, especially cash loans, but won’t drastically affect housing loans. Still, with rising interest rates and property prices, many might face trouble. Thought it was easy before? Think again!
Bottom Line
HNB has had enough of loose lending. Now, citizens need to get serious about their finances because getting a loan will be a real challenge. Already in debt? Prepare for higher monthly payments and less wiggle room.
So, what do you think? Are these rules too harsh, or is it about time someone stopped the credit madness? Drop a comment — let’s figure out how to survive this credit drought together!
