Erste enabled the choice of fixed interest rate for existing housing and renovation loans

Zagreb, 8 July 2015 – In order to enable its clients assurance from a possible increase of reference interest rate EURIBOR in the future, Erste&Steiermarkische Bank d.d. (Erste bank) offered them the option of choosing a fixed interest rate for housing and renovation loans with a currency clause in euro. The offer includes new loans with a repayment period of up to 20 years, as well as existing loans with remaining repayment period of up to 20 years. In accordance with that, existing clients, users of housing and renovation loans with a currency clause  in euro will be able to change the kind of interest rate from variable, related to EURIBOR, to a fixed interest rate.

Fixed interest rate will be in the range of 5.95% to 6.55% for housing loans and 6.85% to 7.45% for renovation loans. Since fixed interest rate covers the entire risk of its change during the repayment period, it is thereby higher in relation to the current average variable interest rate. For clients who decide to realise this option, the fixed interest rate will be higher by 0.45 percentage points on average in relation to the current rate they use and the exact calculation may differ in individual cases and will depend on specific elements of each individual loan.

The bank does not affect the level of EURIBOR and cannot foresee its future movement. At this moment it is in the lower levels and, considering the many factors that influence its movement, a further decline as well as growth of the value of EURIBOR is possible in the future. In accordance with that, variable interest rates related to EURIBOR will change. This is why it is important to note that a possible change of interest rate from variable to fixed is an individual decision of every single loan user who makes the decision on the basis of their own assessment of long-term profitability of such a step.

By choosing a fixed interest rate, clients will have the opportunity to protect themselves from the risk of a possible increase of EURIBOR in the future, that is, ensure themselves from a possible influence of such movements to the level of interest rate. On the other hand, clients who continue to use variable interest rate during loan repayment period will continue to bear part of the risk of its possible increase in a future period, but, at the same time, their rate will at this point in time be lower in relation to the fixed interest rate.

Clients who wish to change their existing interest rate to a fixed one can do that by submitting the application at a bank office. They will not be required to enclose any additional documentation. The bank does not charge any fees for the change of conditions to a loan, but considering the fact that an annex to a loan contract is made, clients need to count on costs of notarial certification, that is solemnisation.