Summer in Croatia brings new business conduct obligations for the banks regarding consumer lending.
KYC investment profile for consumers will now be more regulated in Croatia from 1 July 2025 i.e. it could be harder to get a loan from the bank as a consumer wanting to buy a new flat, appartment or a house, or even to get non-housing loans.
The amount of new consumer debt is now limited so that, when a new loan is granted:
- the ratio of monthly total debt service to income (debt service to income, DSTI) may not exceed 45% for housing loans and 40% for non-housing loans;
- the ratio of the amount of consumer loan to the value of pledged immovable property (loan to value, LTV) may not exceed 90%.
- the maturity of housing loans and non-housing loans to consumers collateralised by immovable property is limited to 30 years, while the maturity of other non-housing loans is limited to 10 years (with exceptions depending on collateral).
The functionality of the capital market is nevertheless protected by certain exemptions, where the banks will still be allowed to grant quarterly 20% of the amount of consumer housing loans and 10% of the amount of other loans to consumers beyond the aforementioned DSTI limits, as well as 20% of loans to consumers beyond the LTV limits, based on their own assessment.
Exemptions also protect the consumers, so when granting housing loans, exemptions may primarily be applied to consumers addressing their housing needs by the loan, with the aim of mitigating a possible unfavourable effect on consumers who are purchasing their first home or a home that more adequately meets their family needs.
