Slovak households have highest debt in Central Europe

The indebtedness of Slovak households is among the highest within the central and eastern European region, as the number of loans provided to Slovak households continued to grow in the first three quarters of 2017, going up by 13.6 percent year-on-year, TASR reported on Tuesday. According to the Slovak central bank (NBS), the growth in household indebtedness represents the most significant risk to the stability of the financial sector in Slovakia. "Housing loans as well as consumer loans maintain the strong growth rate," the head of NBS's department for market supervision Vladimír Dvořáček said at a press conference earlier in the day, adding that this is mainly due to the continuing positive developments on the labour market as well as in the loan supply and housing market. According to NBS, the high level of indebtedness brings about several risks, as it increases the vulnerability of households, resulting in potential shocks such as an income drop or the loss of a job. According to Dvořáček, NBS is therefore targeting its objectives to establish more prudent terms of providing loans. New, more stringent rules for providing mortgages as well as consumer loans are about to be introduced as of January and similar measures are set to be applied by NBS in the first half of 2018. "If necessary, and we'll monitor this very closely, we're ready to take further measures in this regard," said Dvořáček. NBS further said that the favourable economic situation along with the low interest rate also fuelled significant growth of loans to the corporate sector, with loans provided to businesses exceeding 9 percent in the first three quarters of 2017.