What we know: Credit standards could be even stricter! Experts warn: 'No need'

Croatian experts warn that mortgage conditions could become even stricter, though they argue there is no need for such measures. The National Bank of Croatia has suggested that tighter lending criteria might be necessary if risks continue to rise, citing factors such as rising property prices, geopolitical tensions, and market instability. However, industry professionals believe current regulations are sufficient and that further tightening would unfairly burden the majority of homeowners. The situation reflects a broader shift in the housing market. Fewer citizens are turning to banks for mortgages, partly due to the difficulty in meeting existing requirements. For example, Jelena from Zagreb, who previously purchased an apartment, now finds herself facing higher costs and uncertainty over whether she can secure another loan. “I had to look into other banks besides my own,” she explained, noting that property prices have increased significantly since her last purchase. Industry analysts suggest that the recent regulatory changes, such as limiting mortgage debt to no more than 45% of household income and requiring a minimum down payment of 10%, have already slowed the real estate market. Boro Vujović, a real estate expert, pointed out that demand has dropped sharply, with many potential buyers unable to meet the required down payments. He noted that for a three-million-kuna apartment in Zagreb, a down payment of around 60,000 kuna is typically needed, making it difficult for some households to qualify. According to data from the National Bank of Croatia, home loans remain on an upward trend, growing nearly 15% annually. However, this growth has slowed in the past three months, with annual increases dropping to approximately 12%. Credit intermediaries like Vjeko Peretić attribute this slowdown to a decline in property transactions, which have fallen by more than 20% compared to previous periods. He noted that interest in both credit intermediaries and banks for residential loans has decreased, indicating a cautious approach among lenders and borrowers alike. The National Bank of Croatia is considering additional measures to tighten lending standards, potentially including reducing the proportion of loans relative to household income, limiting loan amounts based on property value, or shortening repayment terms. These measures could be implemented individually or in combination. Meanwhile, the Croatian Banking Association has stated that its members will comply with regulatory requirements and independently apply strict criteria for assessing clients' creditworthiness. Despite these developments, some experts argue that further restrictions are unnecessary. Vjeko Peretić emphasized that only a small percentage, around 1.5%, of homeowners face difficulties in repaying their loans. He questioned why the remaining 98.5% should suffer under new rules, especially if future economic conditions worsen. Similarly, Boro Vujović believes the real issue lies elsewhere, pointing to consumer loans as a greater concern. He remarked that people tend to delay paying off their debts until the very end, suggesting that the focus should be on managing financial behavior rather than imposing stricter lending conditions. Additionally, interest rates play a crucial role in shaping the mortgage landscape. As central banks monitor inflation, attention is increasingly focused on the European Central Bank’s decisions regarding rate adjustments. Any increase in interest rates could further impact borrowing costs and influence the overall stability of the financial system. While the immediate outlook remains uncertain, the debate over whether to impose stricter lending conditions continues to unfold among regulators, industry professionals, and consumers alike.