From July 1, 2025, new measures introduced by the Croatian National Bank (HNB) to limit excessive household debt will come into effect. The measures aim to reduce financial risks and ensure the stability of the real estate market, and specifically relate to cash non-purpose loans. But what exactly does this mean for all of you who are thinking about buying a property or taking out a loan? What are the lending conditions and how will the new measures change the approach of banks when approving loans?
What exactly is changing?
These measures were still being heavily discussed in March when the HNB made a decision on new, stricter lending criteria.
The HNB will thus limit lending criteria based on two key parameters: the ratio of monthly debt repayment and income (DSTI) and the ratio of the loan amount and the value of the mortgaged property (LTV). In order to ensure financial stability, a limit is introduced for both parameters. DSTI (Debt Service-to-Income ratio) measures how much of your monthly income you will have to set aside to repay the loan. For housing loans, the DSTI must not be greater than 45%, while for non-housing loans, this amount cannot exceed 40%. LTV (Loan-to-Value ratio) measures the amount of the loan in relation to the value of the property you use as collateral. Here, the maximum LTV is 90%, which means that you can borrow a maximum of 90% of the property value, and you must provide the rest with your own funds.
How does this affect the amount of the loan?
Based on the new guidelines, the possibility of taking out a loan will be limited, but that does not mean that it will not be possible to get a loan. For example, according to the new measures, for a housing loan for a property whose value is 240,000 euros, for 30 years with an interest rate of 4% and a monthly income of 2000 euros, the maximum loan amount you could get would be 188,515 euros.
This loan amount is based on the DSTI (ratio of monthly debt repayment to income), which must not exceed 45% of your monthly income. In addition, the maximum loan amount is also limited considering the LTV (loan amount to property value ratio), which in this case must not exceed 90% of the property value. If the value of the property were higher, this loan amount would be the amount of the maximum allowed loan according to the DSTI ratio.
So, in this scenario, for a property whose value is 240,000 euros, the maximum loan amount you could get, in accordance with the new HNB rules, would be 188,515 euros.
Why is the HNB introducing these measures?
The introduction of new measures is the result of increasing consumer spending and household debt. Although the goal is to facilitate access to housing loans, excessive debt can create long-term economic risks. The HNB introduced these measures in order to: reduce excessive household debt, especially when it comes to consumers taking out loans for a very long period, strengthen the financial resilience of households in cases of unfavorable macroeconomic scenarios, such as rising interest rates or a decline in the real estate market, reduce the risk of bad loan repayments that could lead to irregular repayments and thus negatively affect the stability of the financial system.
Although it was initially announced that the measures would come into force at the beginning of April, due to market demands, the measures were postponed for three months so that everyone would have enough time to adjust their financial plans to the new conditions.
Exceptions and flexibility in lending
Despite the new restrictions, the HNB allows certain exceptions in lending that enable banks to approve loans that do not meet all the rules. According to the new measures, banks can approve: up to 20% of the amount of housing loans outside the LTV and DSTI restrictions and up to 10% of the amount of other loans outside the DSTI restrictions.
These exceptions allow banks, based on their own assessment of creditworthiness, to approve a portion of the loan that would otherwise be rejected due to restrictions.
Impact on housing lending
One of the main goals of these measures is to slow down the growth of cash non-purpose loans and reduce the burden on households with excessive debt. Considering that these measures primarily relate to cash loans, which recorded a large increase in the past year, it is expected that these measures will have a smaller impact on housing lending. For buyers who are buying their first home or moving to a larger property, the measures will not significantly change the approach to loans, because favorable conditions for housing loans are still offered.
Future lending trends
The HNB predicts that these measures will lead to a slowdown in citizen lending, but it is also expected that interest rates will increase in the future. This means that access to loans could become more expensive, so it is recommended that you consider entering the real estate market now, while interest rates are still relatively low.
These new measures introduced by the HNB set clear limits on debt, but also ensure the stability of the financial system and reduce the risk of excessive household debt. Although they can slow down the dynamics in the real estate market, they also provide protection to consumers and enable a safer financial framework. If you are looking for a housing or non-housing loan, be sure to keep these news in mind and check with your banks how you will fit into the new lending conditions.
