Croatia Central Bank Warns 2% Capital Buffer May Not Curb Lending and Property Risks
Updated
Updated · Croatia Week · Jul 20
Croatia Central Bank Warns 2% Capital Buffer May Not Curb Lending and Property Risks
2 articles · Updated · Croatia Week · Jul 20
Summary
Croatia’s central bank said financial stability risks stayed moderately elevated in the first half of 2026, driven by fast credit growth, surging home prices and rising interest-rate exposure.
HNB said lending and property values are rising faster than incomes, building cyclical vulnerabilities that could leave households and banks more exposed if the economy slows or the housing market corrects sharply.
Banks also face greater rate sensitivity after expanding long-term fixed-rate lending and holdings of long-dated debt securities, while some are reintroducing variable-rate loans after initial fixed periods.
Macroprudential curbs on some consumer lending have been in place since July 2025, and banks must raise the countercyclical capital buffer to 2% from 2027, though HNB said it could tighten further.
External shocks remain the main trigger for domestic risks, with HNB citing geopolitical instability, military conflicts and elevated global equity valuations.