Household mortgages are predominantly tied to fixed rates in Slovakia

The ECB published new Insights into euro area statistics, analyzing the housing loans in the euro area.

Euro area households are continuing to borrow more to buy housing. The total outstanding amount of money borrowed from banks by euro area households for house purchase stood at €4.6 trillion in February 2020, which is approximately 40% of the euro area’s gross domestic product (GDP).

While bank interest rates on loans for house purchase have decreased throughout the euro area, there are different national practices regarding whether household mortgages are tied to fixed or variable rates. In February 2020, around 98% of new loans to Finnish households were at variable rates, whereas for French and Slovak households, less than 2% and 1.5%, respectively, of new loans were at variable rates.

The rising demand for loans among households was supported by low interest rates. In the euro area, average interest rates on new loans for house purchase fell from approximately 3.6% in February 2010 to 1.41% in February 2020. However, a closer look at country-level data reveals a broad variation in interest rate levels within the euro area, ranging from 0.77% in Finland to around 2.88% in Ireland. This particular interest rate for Slovakia was 1,08% in February 2020.

Source: ECB (Insights into euro area statistics)

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