Slovakia's central bank wants to make it harder to finance the purchase of multiple properties with a mortgage, while easing access to home loans for young first-time buyers.The National Bank of Slovakia (NBS) has proposed changes to the loan-to-value (LTV) ratio, which determines how much of a property's value can be financed through a mortgage.
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Under the proposal, mortgages used to purchase a third or subsequent residential property would be subject to a maximum LTV of 70 percent, down from the current 80 percent. This means buyers would need to provide at least 30 percent of the purchase price from their own funds.For example, a buyer purchasing a €300,000 property would need a deposit of €90,000 under a 70-percent LTV limit, compared with €60,000 under the current 80-percent cap.At the same time, the LTV limit for first-time buyers under the age of 35 would increase from 80 percent to 90 percent, reducing the amount of savings needed to obtain a mortgage.
Year-on-year growth in house and flat prices (%). (source: NBS)
Concerns over investment demandThe central bank says the measures are intended to improve housing affordability and reduce risks linked to investment demand in the property market.According to NBS data, around half of new mortgages are currently issued to people who already own another property, while 16 percent finance a third or additional home. Last year, 56 percent of newly purchased properties were bought by people who already owned at least one other property.
