The average interest rate on new housing loans in the euro area at the end of 2022 reached three percent, and in Croatia it was 2.6 percent, the Vecernji List daily reported on Tuesday.

The daily also said that with Croatia’s entry into the euro zone, banks started offering loans with a fixed interest rate throughout the repayment term.

The fight against inflation and waves of raising benchmark interest rates in Europe have started spilling over into the lending conditions of domestic banks.

Although the Croatian Central Bank stated that there is no real need to raise interest rates because banks have freed up about €14 billion of “frozen” liquidity by entering the euro zone, the current tranche of state subsidization of housing loans shows that the offered rates have increased significantly compared to last year.

Some of the banks even offered the highest legally possible rate, signaling that limiting the effective interest rate to 3.75 percent is marginally profitable for them.

Nevertheless, buying real estate with a loan in Croatia is currently more favorable than in the euro zone, especially compared to buying in Central and Eastern European countries that do not have the euro, Vecernji List said.