The Central Bank of Montenegro does not plan to take measures to protect citizens who repay housing loans with variable interest rates. This stems from the answers provided to the RTCG Portal by the CBCG, where they state that they acted in a timely manner in partnership with the banks, which resulted in stability in the segment of housing loans, which, as they say, at the moment do not represent a threat to financial stability and do not require undertaking further measures.
At the end of August, according to CBCG data, debts for housing loans amounted to EUR 579 million.
According to the data of the Credit Register, the average weighted nominal interest rate on housing loans at the end of August this year was 4.96%, while housing loans with variable interest rates make up slightly less than 10% of total approved loans.
In September, the National Bank of Serbia limited the interest rate on housing loans to EUR 200,000 for 15 months. The nominal interest rate on the loan taken until the end of July 2022 – must not exceed 4.08%.
The decision of the NBS technically removed the Euribor from the calculation until the end of 2024. As previously announced by the media in Serbia, this change reduced installments by an average of 20%. Someone who pays 500 euros in installments will pay 100 euros less from October.
The CBCG says that their analysis conducted from June 30, 2022 to August 31, 2023 showed that there was a significant decrease in loans with a variable interest rate, from 35.08% to 9.9%.
As they state, this is a consequence of the recommendation of the Central Bank of Montenegro to commercial banks, from September 2022, that banks prepare client protection programs, including the obligation to inform about all the risks that this type of product contains, i.e. that clients, if they wish, on favorable terms enable the transition from a variable to a fixed interest rate.
“This was done due to the growth of the Euribor, which also affected the growth of the variable interest rate on housing loans”, said the CBCG.
This had the effect of reducing the share of non-performing housing loans in their total portfolio from 3.12% to 1.98%. All the favorable trends mentioned above point to the stability of this segment of the banking portfolio – the CBCG reports.
Despite the economic crisis and rising interest rates, the quality of housing loans granted to natural persons is improving, according to the CBCG.
– This is largely a consequence of the recommendations made in a timely manner by the Central Bank, which required banks to prepare a client protection program.
Housing loans for four years increased by around EUR 200 million
According to the data submitted by the banks to the Credit Register, the average weighted nominal and effective interest rate on housing loans amounted to 4.96% and 5.57% at the end of August this year.
It is interesting that those interest rates, according to the data provided by the CBCG at the end of August 2019, were higher than now and amounted to 5% and 5.69%, respectively.
In contrast to the interest rates of debts based on housing loans, they grow from year to year.
According to the latest available data available from the Credit Register of the Central Bank, at the end of August of this year, the gross debt (overdue and overdue principal) of housing loans granted by banks amounted to EUR 579 million, of which 99% of the amount related to housing loans granted to natural persons .
Data from the CBCG state that on August 31, 2019, the gross debt of these loans amounted to EUR 386 million; on 31 August 2020, EUR 420 million; on October 31, 2021, EUR 443 million, and on August 31, 2022, EUR 544 million.
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