According to sources from banking circles, private banks in Serbia, which outnumber state-owned banks, will be required to include youth loans in their offerings. However, they will not approve these loans or will keep approvals to a minimum.
The Postal Savings Bank was the first to sign an agreement with the Ministry of Finance of Serbia regarding the housing loan program for young people. Other banks, which have been hesitant in recent weeks, now have 30 days to decide whether to join the program, which is backed by the Serbian government. Although initially skeptical about the program’s conditions, particularly the 1% down payment, most lenders are now saying they will expand their credit offerings, writes Aleksandra Nenadović for Nova Ekonomija.
“The Postal Savings Bank is the first bank to participate in the program offering affordable housing loans for young people. We have sent these agreements to all other banks and invited them to participate in this program,” said Finance Minister Siniša Mali.
According to Mali, it is particularly encouraging that 546 young people expressed interest in the program within just 24 hours.
Other banks join the program
Other bankers we contacted have expressed their general intent to participate in the program aimed at assisting young people, but they need more time to prepare and include it in their offerings.
“Since we have a large number of young clients, we always strive to offer solutions that meet their needs and are in demand. Therefore, we can say that we are interested in participating in the current program for housing loans for young people, and we are in the process of analyzing this product. Unfortunately, we cannot specify when we will be able to confirm whether it will be part of Erste Bank’s offerings,” said Erste Bank representatives for Nova Ekonomija.
Raiffeisen Bank also responded that they are willing to be part of the project, but they need time to prepare and finalize the entire process and cannot confirm when they will officially participate. Unicredit Bank has also expressed readiness to offer favorable loans for young people.
According to our sources in banking circles, private banks in Serbia, which are in the majority, will have to include this type of loan in their offerings. However, they may not approve these loans or may approve only a minimal number. Postal Savings Bank is state-owned.
Loans without restrictions
The maximum loan amount is €100,000 with a 1% down payment. The loans are available to all young people aged 20 to 35 who are Serbian citizens and have residence in the country.
There are no restrictions on the location of the property, the loan amount, or the price per square meter. As Minister Mali explained, an individual can take a loan for more than €100,000, but the state guarantees only up to €100,000.
These loans will also be available to individuals without permanent employment. Those employed on fixed-term or indefinite contracts, as well as the unemployed, can apply, but they must have a family guarantor who is creditworthy.
Mali further explained that someone who takes a €75,000 loan will pay a down payment of €750 and only €93 per month in the first year, which is far less than the cost of renting an apartment. Meanwhile, the state will subsidize €124 every month.
“From the second to the sixth year, those who have taken out a €75,000 loan will pay €175 per month, which is still much lower than the rent, and the state will continue to subsidize €124 every month,” said Mali.
He added that from the sixth year onward, the interest rate would be 3.5%, which would amount to about €340 per month, assuming young people are financially independent by that time.
The idea for this type of housing loan came from the highest levels of the government during the protests and blockades, which were primarily led by students demanding transparency and a full investigation into the collapse of a canopy in Novi Sad that resulted in the deaths of 15 people. While students have not responded to this loan offer, they have repeatedly stated that their demands have not been met.
