The Croatian National Bank (HNB) announced on January 22, 2025, the implementation of new macroprudential measures aimed at enhancing the stability of the financial system. The measures will limit consumer credit criteria to slow household borrowing, particularly in the segment of cash loans, and mitigate risks to consumers and financial stability.
These preventive measures are designed to address the accumulation of risks associated with increased household credit and to bolster financial resilience in adverse macroeconomic scenarios. The regulations are set to take effect on April 1, 2025, and are expected to slightly reduce household borrowing, especially in the cash loan segment, thereby lowering risks linked to robust lending activity.
Under the new rules, the monthly repayment-to-income ratio for housing loans must not exceed 45%, while for non-housing loans, it is capped at 40%. Additionally, the loan-to-value ratio for housing loans is restricted to 90%, and the maximum loan term for housing loans is limited to 30 years, with non-housing loans capped at 10 years.
Exceptions will be allowed primarily for consumers addressing housing needs, enabling banks to approve up to 20% of housing loans and 10% of other loans outside the specified criteria. HNB emphasized that these exceptions should primarily benefit first-time homebuyers.
The measures respond to the rapid increase in household loans, which has accelerated since early 2023. The annual growth rate for cash loans surged from 3.6% at the end of 2022 to 15.9% by the end of 2024, raising concerns over repayment difficulties and potential adverse effects on financial stability.
HNB also noted that the average debt repayment burden has risen from 38% of income in 2022 to 41% by the end of 2024, indicating increased vulnerability among households to macroeconomic shocks.
To ensure consistency in lending standards across banks and prevent excessive easing of conditions amid intense market competition, HNB aims to reduce the risk of over-indebtedness among consumers.
A public consultation regarding these measures is open until February 20, 2025.