Slovak National Bank warns of end of cheap loans

The Slovak Central Bank (NBS) has sent a signal to commercial banks that the era of cheap loans might come to an end and urged them to be more cautious in their future provision, financial expert Maros Ovcarik announced on the talk show of teraz.sk on Thursday.

NBS warned the commercial banks about the potential rise in rates in the future. "If the market changed within the next three to five years and the rates started to go up, even small hikes could cause problems. Monthly payments could rise by dozens of euros, which could be more than some families can handle," said the analyst.

An average interest rate for housing loans in Slovakia is 3.5 percent, which is the second highest figure among eurozone countries after Cyprus.

"The volume of loans has seen an enormous growth for a longer time. In August, for instance, it was a year-on-year growth of more than 20 percent," stressed Ovcarik, adding that demand for loans in Slovakia is now the highest in the whole Europe.