Housing and Cash Loans: Croats Borrowing Credit More

Lauren Simmonds

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The trends appear to show that people in Croatia are borrowing more and more credit, mainly for housing and cash loans.

The monthly value of newly approved loans in the housing sector shows greater dynamics in terms of the credit activity of banks in this sector when compared to last year, as has been reported from the Croatian Chamber of Commerce (HGK).

As Poslovni Dnevnik writes on the 3rd of November, 2018, in the first nine months of 2018, when looked at in the sense of a year-on-year comparison, the gross value of newly approved loans in this sector was 2.9 percent higher.

The gross value of newly approved loans at an annual level during 2018’s first nine months increased only in the housing sector and in loans for other purposes, while the value of newly approved revolving loans, overdrafts, credit from credit cards and consumer credits was lower than in it was during the same period last year.

The largest value of credit institution credit to the population in kuna this year is for credit on credit cards and for overdrafts on transaction accounts. Of the newly approved kuna loans with currency clauses, the highest value appears to be in regard to loans for other purposes, followed by housing loans. This can typically be looked at as housing and cash loans.

In line with the dynamics of the growth of new loans, at the end of September this year, the value of the household sector’s debt increased by 3.9 percent to 122.6 billion kuna (up from December 2015). The household sector is currently the most heavily dependent on housing loans (43.2 percent of total debt) and non-purpose loans (37 percent of total debt).

The annual growth rate of total household loans has been being realised for as many as thirteen consecutive months, and interest rates on loans in this sector are at record low levels and appear to be continuing to move downward. As a result, interest rates on ”pure” kuna loans in some sectors fell below kuna loans with a currency clause. This is the case with revolving loans and, for the very first time, with housing loans.

For the first few months, the population has been more borrowing kuna loans than kuna loans with currency clauses. The upcoming period is expected to continue the dynamics of this type of credit activity in banks towards the population in the context of real wage growth and employment.

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