WHAT CHANGES IN THE TERMS OF LENDING?
The CNB limits the amount of monthly debt repayment in relation to consumer income. debt service income, DSTI) to a maximum of 45% for residential and 40% for non-residential loans, and for all loans secured by real estate and the total amount of the loan in relation to the value of the property pledged (engl. loan to value, LTV) which should not be more than 90%. In addition, the maturity of housing loans and other loans secured by real estate is limited to thirty years, and other non-residential loans to ten years. However, banks on the basis of their own assessment in each quarter can grant up to 20% of residential and 10% non-residential loans and beyond the specified DSTI limits, as well as 20% loans to consumers outside the LTV limit. In doing so, exceptions to the granting of housing loans may apply to the greatest extent to consumers who use credit to meet their housing needs.
REPAYMENT TERM
Since most buyers buy real estate in their thirties, they are not even able to take out a loan for a term of more than 30 years, because it is well known that the loan must be repaid by the end of the working life.
In addition, current customers try to repay the loan as early as possible, so everyone who is able to raise the loan as soon as possible. Therefore, we consider that the term of 30 years alone is not decisive in making decisions.
Given our rich and long experience in real estate brokerage, we remember the periods (maximum about 2,000 years) when the trend of loan repayment length was also 30 years, because this is the only way buyers managed to realize a housing loan.
Later, around 2015, this trend decreased to 15 - 20 years.
Now unfortunately when real estate prices are high it is renegotiated the repayment term of the loan to 30 years.
THE AMOUNT OF MONTHLY REPAYMENT OF THE BORROWER'S DEBT IN RELATION TO INCOME
This will be most felt by customers who wanted to repay the loan as soon as possible, and shorten the repayment period as much as possible. However, there is also the possibility of early early payments on the loan lot and thus shorten the repayment period of the loan.
In addition, some buyers will no longer be creditworthy for the amounts they want, more precisely they will have to have a co-borrower or guarantor in order to secure a sufficient amount of credit, sufficient for the property they want to buy.
Until now, customers took out the most common life insurance and thus would settle the difference, now, i.e. from July 1, 2025, the difference will have to be settled by a co-borrower or guarantor.
We believe that this will most affect middle-income customers, for example, married couples who together have incomes between 3,000.00 euros and 4,000.00 euros, because they may be able to handle a larger installment of the loan, if they are willing to make savings, and now with this change they will not be able to realize such a loan, unless they manage to arrange an additional guarantor or co-borrower.
Once, about twenty years ago, a guarantor or co-borrower was found quite easily, even the law allowed that the same person could be a co-borrower or guarantor in several different loans. Now, more precisely, for a long time this is no longer possible. And also offered by various unpleasant experiences, no one wants to be a guarantor or co-borrower. So now it is very difficult for buyers to find an additional co-borrower or guarantor.
LOAN AMOUNT AND PLEDGE ON REAL ESTATE
According to the new rules, the loan amount should not be more than 90% of the assessment of the property. The valuation of the property is carried out by the appraiser by the bank, and after the appraiser makes his opinion on the price of the property, the bank approves 90% of this amount. This means that buyers must now have 10% of their own funds for part of the purchase price. Until now, customers have been able to finance the total purchase price through the realization of the loan, and from July 1, 2025, they will have to finance 10%, ie part of the amount, with their own funds.
Since the real estate agency Euro-interiors has been operating for almost thirty years, such measures and conditions have existed before, but the buyers have settled the missing part from non-earmarked loans. Now that is, after July 1, 2025, this will not be possible. Specifically, whoever wants to take out a dedicated housing loan in the maximum amount will have to take care that he does not have a non-earmarked loan that could affect his creditworthiness.
The debt also includes the use of overdrafts on the current account and credits by credit cards, but does not include monthly spending by cards with deferred payments (so-called “deferred payment”). chargecards) in addition to installment repayment.
So to take out a home loan the most ideal is to be without any debts, including the allowable minus.
ARE THERE ANY EXEMPTIONS?
Yes, there are exceptions. The CNB has allowed banks to grant 20% of loans in each quarter with certain exemptions. To create conditions for exemptions you must be a “neat client”. Which means that you have to settle your obligations on time, but also be employed by an orderly employer who settles your obligations properly. Because in addition to the creditworthiness of the client, the bank also checks the creditworthiness of your employer.
WILL THESE CHANGES BRING DOWN REAL ESTATE PRICES?
No one can say for sure what will happen to real estate prices in the coming period, even until the end of this year.
However, what we can say with certainty by following the statistics in our real estate agency Euro-interiors as the leading real estate agency in Zagreb and beyond, that we still have much more buyers than real estate. We still sell a large number of properties that have an acceptable price for today's conditions to our customers from the waiting list. Such properties generally do not even come up for ads. If you are interested in how waiting lists work read in one of our previous blogs https://www.euro-interijeri.hr/blog/lista-cekanja
As long as the trend of real estate demand is greater than supply, real estate prices will not fall. We know that now a lot of potential buyers waiting for their opportunity to buy “cheap and good real estate” will say that this is one big bubble that will blow and maybe, but only maybe they are right.
Our message to those who expect something like 2010 and prices like 2010, is to check how much the salaries in the Republic of Croatia were then? Namely, salaries in the Republic of Croatia have increased considerably compared to 2010.
Our message to potential buyers is to buy the property when they need it. If they really need real estate then yesterday was the right time for them, today is already a day late.
All those who would buy a property as an investment and have savings for it, know best themselves when is the right time to buy real estate and is real estate the best way to store excess money? If they managed to create excess money we are sure they know and what is the best way to invest, as well as when is the right time to invest?
You can read more about this topic on the official website of the CNB
https://www.hnb.hr/-/kriteriji-kreditiranja-potrosaca-pitanja-i-odgovori
If you are at the stage of selling real estate I invite you to contact us, 28 years of experience in real estate business gives us full credibility that we will sell your property quickly to one of our customers on the waiting list. Contact us with confidence!
If you are in the process of buying a property I also invite you to contact us. Our partner credit brokers will calculate for you completely free of charge how much loan you can withdraw, and we will find the right property for you. Contact us with confidence!