In order to preserve the stability of the financial system, the Croatian National Bank has introduced new macroprudential measures to limit the criteria for consumer lending.
The borrower-based measures are an important part of the macroprudential toolbox. They serve as a kind of safety net to mitigate excessive consumer borrowing, i.e. excessive risk-taking by banks, which could lead to loan repayment difficulties and create losses for banks, adversely affecting economic growth and financial stability.
By the Decision on consumer lending criteria, the CNB limits the ratio of monthly debt service to consumer income (debt service to income, DSTI) to a maximum of 45% for housing loans and 40% for non-housing loans. Additionally, for loans secured by real estate, the ratio of the total loan amount to the value of the real estate serving as collateral (loan to value, LTV) may not exceed 90%. Furthermore, the maturity of housing loans and non-housing loans to consumers collateralised by immovable property is limited to thirty, while the maturity of other non-housing loans is limited to ten years. However, banks will have the flexibility to approve up to 20% of housing loans and 10% of non-housing loans each quarter beyond the specified DSTI limits, as well as 20% of loans beyond the LTV limit. The exceptions in granting housing loans may largely be used for consumers applying for a loan to address their housing needs.
The decision on consumer credit criteria will take effect on July 1, 2025, and will apply to loans contracted from that date onward.
LINKS:
Decision on consumer lending criteria
Announcement of the adoption of the Decision on consumer lending criteria, 19 March 2025
Consumer lending criteria – questions and answers, 19 March 2025
Announcement of the macroprudential measure imposing limits on consumer lending criteria