As inflation cools and central banks slowly pivot from tightening to easing, borrowers across Central Europe and the Balkans are watching interest rates closely. Whether you’re a homebuyer in Slovenia, a business in Serbia, or a policymaker in Bulgaria preparing for euro adoption, the cost of credit in 2025 reflects a complex mix of monetary strategy, currency alignment, and regional risk dynamics.
Let’s dive into how loan rates currently stack up across the region—and what they tell us about economic momentum and monetary divergence.
Central Europe and the Balkans
The 14 countries we analyzed—ranging from EU members like Poland and Austria to euro-independent economies like Albania and Serbia—exhibit a wide spread in borrowing costs. This reflects both their macroeconomic fundamentals and their monetary regimes.
| Country | Avg. Mortgage Rate (2025) | Policy/Reference Rate |
|---|---|---|
| Austria | 3.42% | ECB (2.15%) |
| Slovenia | 3.03% | ECB |
| Croatia | 3.6% | ECB |
| Slovakia | 4.0% | ECB |
| Greece | 3.7–4.5% | ECB |
| Montenegro | ~4.6% | Euroized economy (no central bank) |
| Bulgaria | 2.77% | 1.91% (pre-euro peg) |
| Bosnia-Herzegovina | 3.9% | Euro peg (no rate autonomy) |
| Hungary | 6.6% | 6.50% |
| Poland | 7.55% | 5.00% |
| Romania | 6.52% | 6.50% |
| Czech Republic | 4.7% | 3.50% |
| Serbia | 9.91% | 5.75% |
| Albania | 4.5–7.5% | 2.50% |
| North Macedonia | 3.92% | 5.35% |
Eurozone Shield
Countries tied directly to the euro—either through membership (e.g., Austria, Slovenia, Slovakia, Croatia) or unilateral use (Montenegro)—benefit from the European Central Bank’s ongoing easing cycle. Since April 2025, the ECB has cut its main refinancing rate twice to 2.15%, helping drive mortgage rates down to 3–4% across these countries.
Croatia’s swift integration since adopting the euro in 2023 is a case in point: average new mortgage offers now hover around 3.6%, a significant drop from pre-accession highs near 5%. Similarly, Slovenia and Austria enjoy some of the lowest rates in the region.
Greece, though historically riskier, has seen new mortgage rates fall from 4.45% in Q1 2024 to 3.71% by year-end—thanks to strong bank liquidity and better sovereign ratings.
The High-Rate Holdouts
Outside the eurozone, central banks are grappling with divergent inflation paths. Romania and Hungary both maintain high policy rates (6.5%), with commercial banks quoting mortgage rates between 6.5–7% on average. Poland follows closely with average new mortgages around 7.55%, reflecting elevated inflation expectations and tight monetary policy.
Serbia is the region’s outlier: despite a base rate of 5.75%, commercial mortgage lending exceeds 9.9%. The spread highlights perceived currency and credit risks, as well as a highly cautious banking sector.
Hungary’s case is nuanced. While base rates remain elevated, government-sponsored programs allow first-time buyers to lock in rates as low as 5%—an attempt to stimulate housing demand amid affordability concerns.
Bulgaria’s Pre-Euro Advantage
With euro adoption set for 2026, Bulgaria presents a fascinating case. Despite operating under a currency board regime (effectively pegging the lev to the euro), its central bank has begun easing ahead of the ECB. As of July 2025, the base rate stands at just 1.91%, and average mortgage rates have dropped to 2.77%—the lowest in the region.
Investors and borrowers alike are pricing in continued convergence, with some banks already offering euro-denominated loans at sub-3% rates in anticipation of the monetary shift.
Smaller Economies, Mixed Signals
In Albania, North Macedonia, and Bosnia-Herzegovina, rates remain a patchwork:
- Albania recently cut its base rate to 2.5%, with mortgage offers ranging widely from 4.5–7.5%, depending on the lender and terms.
- North Macedonia, despite a higher policy rate of 5.35%, sees competitive mortgage offers around 3.92%, likely reflecting bank competition and stable demand.
- Bosnia, with a de facto euro peg, enjoys relatively stable loan rates (~3.9%) despite lacking monetary sovereignty.
The Road Ahead: Downward Drift with Divergences
Looking forward, the borrowing landscape is expected to shift further:
- More ECB cuts: Markets expect at least one more ECB rate cut in 2025. This will further lower costs in the eurozone and Bulgaria.
- Delayed easing elsewhere: Poland, Romania, and Hungary may keep rates elevated until headline inflation aligns more closely with EU targets.
- Structural subsidies: Programs in Hungary and Poland are temporarily distorting headline mortgage rates, masking underlying affordability issues.
- Euro aspirants: Countries like Albania and North Macedonia may accelerate reforms to reduce rate volatility and align with the broader European trajectory.
Convergence, with Caveats
While Europe’s credit markets are trending toward normalization, Central Europe and the Balkans remain a study in contrasts. Eurozone membership provides rate stability and lower borrowing costs. But for non-euro states, inflation dynamics, political risks, and creditworthiness still determine access to affordable finance.
For borrowers and investors, understanding the “why” behind the rates—not just the numbers themselves—is crucial in 2025. As the ECB leads a soft landing, the pace of convergence across the region will be shaped by reform credibility, central bank discipline, and a shared goal: sustainable growth underpinned by manageable credit costs.