More Favorable Repayment of Housing Loans Linked to the Swiss Franc

Erste Bank announced today that it has offered its clients, users of housing loans for the purchase and construction of real estate linked to the Swiss franc, a model to address the issue of increased annuities due to the rise in the franc’s exchange rate, among which is a reduction in the interest rate by 0.25 percentage points.

The model, which will be applied from October 1 to the annuities due on November 1, consists of three fundamental measures that allow clients a lower monthly annuity and easier repayment of the housing loan, Erste Bank emphasizes. Clients are thus offered an automatic reduction of the interest rate by 0.25 percentage points for housing loans for the purchase and construction of real estate linked to the franc, with the new interest rate not being lower than 5.00 percent. The second measure is the possibility of extending the final maturity of these housing loans by up to 10 years, provided that the total maturity cannot exceed 30 years, and the third is the possibility of contracting or increasing the already contracted amount of the remaining value on existing housing loans by a maximum of 40 percent of the contracted principal. Erste Bank emphasizes that, in addition to the automatic reduction of the interest rate per housing loan, the client can, at their own request, contract one or both of the remaining measures without paying a fee for changing the loan conditions.

They add that, in addition to housing loans for the purchase and construction of real estate, the extension of the repayment period by up to 10 years and the contracting of the remaining value is also available for so-called adaptation loans, with the final maturity not exceeding 20 years. Clients are finding it increasingly difficult to repay loans linked to the Swiss franc due to the high exchange rate, and the reduction in the interest rate only partially addresses the problem of significant increases in monthly annuities in kuna, noted Zdenko Matak, Director of the Citizenship Sector, adding that they have therefore also offered an extension of the repayment period and contracting, or increasing the contracted remaining value. Erste Bank also states that they continue to offer clients the option to convert loans linked to the Swiss franc into loans linked to the euro, with a fee of 0.1 percent. In this case, they add, the interest rate is also adjusted, and the rate approved after conversion to euro is lower than the regular interest rate for housing loans in euro, amounting to 5.90 percent for models of housing loans for the purchase of real estate and the construction of residential space. (H)