In 2023, high interest rates and economic slowdown were the two factors leading to the weakening of the dynamics of bank loans to households and businesses.
Conversely, every month witnesses an increase in loans renegotiated, primarily due to consecutive interest rate hikes by the European Central Bank and the difficulties faced by households and businesses to meet their monthly installments. As 2024 commences with persistently high interest rates, it appears that they will continue to test the resilience of businesses and households for new borrowing.
According to Central Bank data, by the end of November, the balance of net new housing loans was €87.8 million, down from €91 million the previous month, while the value of loans that underwent renegotiation was €150 million, up from €127 million in the previous month. New consumer loans stood at €21.3 million at the end of November, with restructuring at a minimal €2.5 million.
New business loans above €1 million amounted to €42.4 million at the end of November, down from €45.1 million the previous month, and loan restructuring reached €49.1 million, up from €47.4 million.
New loans tend to be smaller, while restructuring, on the contrary, is much larger, mainly due to high interest rates.
According to Central Bank data, the interest rate for housing loans increased to 5.04%, compared to 4.91% the previous month and 2.95% a year ago.
The increase over twelve months is 2.09%. The average interest rate on housing loans in the Eurozone is 4.87%.
Countries with the highest interest rates for housing loans are recorded in Lithuania (5.84%), Estonia (5.80%), Latvia (5.71%), Slovenia (5.66%), Germany (5.62%), Belgium (5.45%), Netherlands (5.12%), Greece and Italy (5.10%), and Cyprus (5.04%).
Below the Eurozone average (4.87%), Portugal (4.85%), Luxembourg (4.73%), Slovakia (4.69%), Austria (4.66%), Ireland (4.43%), Finland (4.40%), Spain (4.15%), France (3.58%), Croatia (3.06%), and Malta (2.49%) offer housing loans.
