High number of household loans in Slovakia poses financial risk

The persisting strong growth of loans to households represents a significant risk to financial stability, particularly in the form of rising household indebtedness and the creation of imbalances in the real estate market. This was reported by Vladimír Dvořáček, the executive director of the Financial Market Supervision Department at the National Bank of Slovakia (NBS). He added that, since 2010, the household debt-to-GDP ratio has doubled and now exceeds over 30 percent. He believes this results in higher vulnerability in the event of adverse developments. As Marek Ličák, the head of the NBS macro-level supervision department added, household loans growth here is the fastest in the EU. On the other hand, households report relatively small financial savings. At the same time, imbalances arise within the real estate market. Apartment prices are rising and there is also a decrease in the offers of apartments. Also, the trend of selling new buildings only on paper is observed.