Citizens repaying loans in euros can finally breathe easier as the European Central Bank (ECB) has begun easing its monetary policy by reducing its key interest rates by 25 basis points. Annual inflation slowed to 4.5% in May, aligning with the central bank’s target deviation range of ±1.5% from its 3% inflation goal.
Dušan Uzelac from Kamatica, speaking on the “Good Morning, Vojvodina” show, explained that those with euro-denominated debts are affected by both the euro and Euribor rates. He noted that while the ECB has kept interest rates unchanged, Euribor has slightly decreased, which will be noticeable—though not drastically so—in monthly loan payments.
Uzelac advised that ideally, borrowers should have three to six months’ worth of loan payments set aside as a reserve to accommodate life changes. Economists suggest that while interest rates may not drop dramatically in the near future, the current easing is a positive development.
When choosing a mortgage, Uzelac recommends not solely relying on advice from bank salespeople or loan advisors, as their goal is to sell their products. Instead, he emphasizes that a mortgage is a long-term commitment, often spanning 20 to 30 years.
“The best loan is one that finances an investment lasting longer than the loan term. Mortgages typically fit this criterion, as properties usually outlast the repayment period. Start with an amount you can comfortably afford for your loan,” Uzelac advises.
