New lending restrictions could have major consequences
According to the Bank Association's calculations, the restrictions mean the end of access to credit for 213,000 pensioners with pensions of under 700 euro, meaning 57% of all pensioners, for 114,000 or 20% of all workers, who have net wages lower than EUR 928 and have a dependent child, as well for between 10-25% of workers with higher wages.
The restrictions, announced by Banka Slovenije for 1 November as a result of what the central bank assessed as unsustainable consumer lending growth, introduce maximum 84-month maturity for consumer loans.
They moreover include loan-to-value ratios (loan payments relative to the client's annual income) of under 50% for clients with monthly income of up to twice the gross minimum wage and of under 67% for those making more than that.
What is more, the borrower will have to be left with at least 76% of the gross minimum wage after paying the monthly instalment or more if they have a dependent family member.
The same loan-to-value ratios will also become obligatory for housing loans.
The Bank Association argues the restrictions will have wide consequence if the state fails to provide alternative financing sources.
"We asses that lending will drop by EUR 50-70 million a month or EUR 600-740 million a year, which also entails lower retail consumption as well as the purchases primarily of 'used' flats, which in turn is also reflected in lower VAT revenue for the state," the association wrote, adding GDP growth would probably be affected too.
"It is hard to assess the effect precisely, since some of the consumers will likely also opt for borrowing on the 'grey' or unregulated market, which is not transparent. This could also mean them paying much higher costs, while at the same time being exposed to risks and different kinds of debt collection rules," the press release also says.
The association especially took issue with the inclusion of costs related to the clients' dependent family members. While agreeing this also needed to be considered, it disagrees with the explicit nature of this cost in the restrictions, arguing banks had already been factoring this into living expenses.
Listing a few examples from its calculations, the association for instance said that a couple with two dependent children, an average wage and without any existing credit liabilities would be able to take out a consumer loan of no more than EUR 11,500 for a maximum period of seven years and a 20-year housing loan of no more than EUR 30,000 each. No additional borrowing would be possible after that.