According to the data of the Credit Bureau of the Association of Banks, the average housing loan in Serbia is 29 thousand euros. There are more than 131,000 housing loans in Serbia. It is not surprising because the fall of Euribor, the European interest rate that affects the price of borrowing in Serbia, caused attention by half a percent. Ljubica Pantelic from the Belgrade Banking Academy explains on the basis of which banks reduce interest rates.
Ljubica Pantelic from the Belgrade Banking Academy stated for RTS that banks’ tariffs are not prescribed by law and that each bank individually makes decisions on the prices of its services, which depends on market conditions and internal circumstances that the bank faces.
“It is very possible that certain banks have changed the price of their services they provide to their customers, but any change in any bank service implies that customers are notified in writing and have 60 days to comply,” Ljubica Pantelic said during guest appearances in the Morning Program.
She mentioned that, if the users do not advertise, it is assumed that they accept the new business conditions of the bank, as well as that the users have the right to terminate the contract without costs if the bank has not informed them about the change of conditions.
Ljubica Pantelic stated that banks increase the prices of services “in the last moments” and that such decisions are unpopular and do not meet with a good response from clients.
“Given that the previous period was difficult for banks, as well as for all other legal entities and market participants, it is possible that some of the banks faced difficulties in doing business and found a way out of the increase in transaction services, ie the final measure to raise the price of their services,” Pantelic pointed out.
“Euribor has had a downward trend for many years”.
Speaking about the fall of Euribor, Ljubica Pantelic said that at this moment it is difficult to talk about the movement of interest rates, since Euribor and all interest rates on the market have a declining trend for many years caused by economic factors, and that in the previous year factors.
“The level at which Euribor is now is a historical minimum, that is, for some rates it is even a maximum of -0.5 percent, while in the previous ten years it was five percent, if we talk about October 2008,” said Ljubica Pantelic.
She added that the fall in the interest rate was noticed in a longer time interval and that it was especially noticed during the pandemic period, when the fall was caused by non-economic factors.
Ljubica Pantelic also mentioned other factors on which the price of the loan beneficiary’s installment depends, which were initially approved and Euro-indexed with a variable interest rate, where the variable part is related to Euribor.
“Since this decline is not so pronounced, there is a noticeable reduction in the installment, but it is not a drastic reduction, it is some two, three, four euros, depending on the loan amount, the length at which the loan was initially approved and the moment of loan repayment,” said Pantelic.
She noted that banks are not able to change the interest rate on a daily basis and that Euribor is published every day for all its maturities and that the interest rate is adjusted in the manner agreed in the contract.
“Most often it is a semi-annual or quarterly adjustment. Although we are in favor of the low value of Euribor, it will really change, probably on December 31, when it was the accounting period, so the next time it will change at the end of March, at the end of June, quarterly or semi-annually, depends on each individual model,” said Ljubica Pantelic.
As she stated, the level of Euribor is historically low and a few months ago it was said that it was not possible to reach it.
“Now we have seen that anything is possible. This pandemic that we faced in previous years is one of those phenomena that is impossible to predict, and such situations never bring good changes, especially in markets that do not like uncertainty, do not like drastic changes where it is not clear in the foreseeable future how things will go on,” Pantelic pointed out.
Ljubica Pantelic believes that there is a possibility that the interest rate will recover slightly or remain at the current level and, as she stated, she does not believe that Euribor will grow in the next two years, having in mind the monetary policy of the European Central Bank and the time needed to repair the consequences after-market shocks.
Ljubica Pantelic stated that this moment, theoretically speaking, from the aspect of the price of the loan, is favorable for taking a loan.
“On the other hand, these factors that we talked about are not of an economic nature, they affect not only the demand, but also the supply, and therefore, there is a risk that the supply of loans will decrease,” said Ljubica Pantelic.
She added that a period of certainty and security in the market is needed in order for normal lending to continue and stabilize.
“I must say that, in addition to facing an extremely unpleasant situation and shocks in the market, we did not have a decline in lending. Therefore, the banks did not stop lending, and the cycle that is necessary for the growth and generation of income in the economy, for consumption and overall growth in the economy as a whole was maintained in the previous period,” Pantelic said.
Ljubica Pantelic emphasized that, when during the state of emergency there was a problem between supply and demand, the state took measures at the right time to move and move that moment for later, as well as to facilitate business operations and remove the burden of credit from banks.
Speaking about the fall in prices, Ljubica Pantelic said that the fall in prices has been felt in the Eurozone for a long time and that she talks about the fact that some European economies have significant problems with the fall in consumption.
“The European Central Bank deals with this on a daily basis and fights deflation with various measures at its disposal. It is a problem that is present, it is not necessarily related to the situation with coronavirus and pandemic, but it is a problem that the economy is struggling with,” she said as a guest of the Morning Program.
Ljubica Pantelic said that it is an economic factor and that these factors can be solved, and that work should be done to reduce and eliminate non-economic factors to the end, RTS reports.
