Erste & Steiermaerkische Bank has increased interest rates on newly approved housing loans with a currency clause in Swiss francs, with increases ranging from 0.16 to 0.55 percentage points, and the new interest rates are between 5.05 percent and 5.55 percent, depending on the specific loan model, the bank announced today, adding that other loan conditions remain unchanged.
Interest rates on existing housing and renovation loans with a currency clause in Swiss francs will increase starting January 1, 2008, with an increase of up to 0.55 percentage points. The primary reason for the increase in interest rates is the rise in the quarterly LIBOR for Swiss francs, which is linked to the cost of funding sources, the statement notes, adding that the bank has not raised interest rates since 2004, when it introduced loans with a currency clause in francs, despite the fact that reference interest rates in the market have risen multiple times.
The exchange rate of the Swiss franc against the kuna has continuously fallen from 2004 to today, with certain fluctuations, which ultimately resulted in a lower annuity of the loan in kunas that the client repays, according to ESB. For example, a client who took out a housing loan in December 2004 in the amount of 120,000 francs for a term of 240 months and with an interest rate of 4.99 percent had a first annuity of 791 francs, or 3,910 kunas converted at the average exchange rate of Erste Bank.
