Zoran Bohaček, President of the Croatian Bank Association, recently announced that the interests on loans will increase an average 1 %.

This caused a strong negative reaction from the Construction Developers Association, recently formed within the Croatian Employers Association, demanding a reduction of the interest rates, especially interests on residential loans, so that citizens can more easily buy property. According to the data gathered by the Croatian National Bank, growth rate of the amount of residential loans in the fist ten month of 2008 decreased by 50%, while the interest rate (loans in kunas with a currency clause and loans in Euro) grew from 4,82 % to 6,04 %. This growth of more than 25% is largely a consequence of banks withholding the approval of loans in Swiss francs, as they had lower nominal interest rates. None of the banks wanted to comment on the developer’s request to reduce the interest rates. Unofficially they commented that the developers are more interested in the fact that housing and apartments are not selling than they are about the living standard of Croatian citizens. They would like to emphasize that this is a necessary decision, since financing is no longer cheap, because of the current conditions of the international monetary markets. Their new loan policies are covering the costs of the expensive financial resources on the Croatian and international markets. ‘’We are still giving residential loans, but under more strict conditions’,” stated one banker and suggests to that if the developers want to sell more successfully they should reduce their prices and not pressure the banks.