What is APR and why is it more important than the nominal interest rate?

APR (Annual Percentage Rate) also includes costs such as approval fees, account management fees, and insurance, so it gives a better picture of the real cost of a loan. Two offers with the same nominal interest rate can have different APRs.

Which is better in 2026: a fixed or a variable interest rate?

If you want a predictable monthly payment and peace of mind, a fixed interest rate is generally the safer choice. A variable rate makes sense if you expect EURIBOR to fall and have enough financial buffer for the scenario where payments increase.

How should I compare bank offers?

First compare the APR, not just the nominal interest rate, then check the term, early repayment conditions, insurance costs, and any extra requirements such as account packages, insurance, or income transfers.

What does a loan stress test mean?

It is a calculation showing how your monthly payment changes if the interest rate rises, for example by EURIBOR +1 %. It helps you check whether you could still afford the payment in a worse-case scenario.

Is early repayment worth it?

Often yes, because it reduces future interest costs, but you should check the conditions and any fees or charges. It makes sense to calculate the savings and compare them with alternatives such as saving or other investments.

Loan 2026: how to choose the right mortgage, what interest rates and APR look like

Choosing a mortgage in 2026 is more demanding than at any point in the past decade. After several years of fluctuations, interest rates have finally entered a calmer phase, but that does not mean banks have stopped adjusting their offers. At the start of 2026, fixed interest rates at some banks even increased slightly, while variable rates continue to move in line with EURIBOR, which remains at elevated levels. In December 2025, the Bank of Slovenia noted that market participants do not expect further cuts to the ECB’s key interest rates in 2026, but rather stabilisation at current levels. That means most loan terms in 2026 will be shaped around current EURIBOR values and bank margins, without major surprises.

Interest rates

When choosing a loan, it is therefore essential to understand how interest rates are formed. The Bank of Slovenia publishes monthly statistics on interest rates for new household business, showing trends in fixed and variable rates. Interest rates are an important tool through which central banks influence prices, economic growth, and stability, and they are one of the key elements in household borrowing decisions. At the start of 2026, average fixed interest rates for housing loans are roughly in the 3,3 % to 4,2 % range, depending on the term and the bank, while variable rates are tied to 6-month EURIBOR, which stabilised slightly above 3 % at the beginning of the year. This means variable rates for new loans most often range between 4,0 % and 4,6 %, once banks add their margin.

Fixed or variable interest rate?

The difference between fixed and variable interest rates has become less obvious again in 2026. In 2022-2024, variable rates were often noticeably higher, so people moved heavily toward fixed-rate loans. Today, that gap has narrowed, which means the decision depends more on your personal risk tolerance. A fixed interest rate brings complete predictability, because the monthly payment does not change until the loan is fully repaid. A variable interest rate could fall in the coming years if the ECB starts cutting again in 2027 or 2028, but it could also rise if inflation strengthens again. Since the Bank of Slovenia warns that the ECB’s future moves will depend mainly on the inflation outlook and related risks, it is clear that a variable interest rate is still a risky choice in 2026, even if not as extreme as it was two years ago.

Annual Percentage Rate (APR)

When comparing loans, the most important indicator is APR (Annual Percentage Rate), which includes all loan costs: interest, approval fees, insurance costs, account management fees, and other additional costs. APR is therefore the best way to compare banks, because it reveals the true cost of the loan. In practice, a bank can have a lower nominal interest rate but a higher APR because of high approval fees or mandatory insurance with an external insurer. In 2026, APR for 20-year loans most often falls between 4,1 % and 4,8 %, and the differences between banks can be substantial, especially for larger amounts.

Example

For a clearer picture, let us look at a concrete example. If you take out a 150.000 € loan over 20 years with a fixed interest rate of 3,6 %, the monthly payment is roughly 880 €. If the APR is 4,1 % because of approval and insurance costs, the total loan cost increases by several thousand euros. With a variable interest rate of 4,3 %, the initial payment is roughly 920 €, but it can fall or rise in the coming years. If EURIBOR were to fall by 1 percentage point in 2027, the payment would drop by around 70-80 €. If it rose by 1 percentage point, the payment would increase by around 80-90 €. This means a variable interest rate in 2026 mainly makes sense for borrowers who have enough financial buffer to absorb potential swings.

Insurance costs

Insurance costs are another important element when choosing a loan. Most banks offer three options: a mortgage, insurance through an insurer, or a combination of both. A mortgage is usually the cheapest option, but it requires registration in the land register and a property valuation. Insurance through an insurer is faster, but more expensive, because the insurance cost can amount to a percentage of the total loan. In 2026, insurance costs at some insurers range between 1,5 % and 3 % of the loan value, which can mean several thousand euros in additional costs. That is why, when comparing APR, it is essential to check whether the loan is secured by a mortgage or through an insurer.

Time to loan approval at the bank

When choosing a bank, it also matters how quickly the bank processes an application. In 2026, the differences between banks are significant. Some banks process applications within one week, while others need three to four weeks. If you are buying property in a market where speed matters, this can be an important factor. It is also important to check whether the bank requires you to open a transaction account, receive your salary there regularly, or take additional products such as life insurance, accident insurance, or saving products. These conditions can affect the final cost of the loan, so they need to be included in the comparison.

The role of the loan term

In 2026, interest in longer-term loans, such as 25 or 30 years, has also increased. A longer term means a lower monthly payment, but a higher total loan cost. If you take a 150.000 € loan over 30 years with a fixed interest rate of 3,7 %, the monthly payment is roughly 690 €, which is noticeably less than with a 20-year term. However, the total loan cost increases by more than 40.000 €. A longer term mainly makes sense for people who want a lower monthly payment because of other financial obligations, but you still need to pay attention to the total cost.

Stress-testing loan terms

When deciding between banks, it is useful to use a loan calculator, which lets you calculate the monthly payment, the total loan cost, and the impact of interest rate changes. The calculator is especially useful for variable-rate loans because it lets you simulate different EURIBOR scenarios. In 2026, it is advisable to calculate at least three scenarios: stable EURIBOR, a drop of 1 percentage point, and an increase of 1 percentage point. That gives you a realistic sense of how sensitive your monthly payment is.

Advice for FinPortal readers:

For a personalised calculation, use our loan calculator and run your own stress test of loan terms.

Conclusion

To sum up, choosing a mortgage in 2026 depends on three key factors: the stability of interest rates, your risk tolerance, and the total loan cost expressed through APR. A fixed interest rate is the best choice for people who want complete predictability and stability. A variable interest rate suits those who believe EURIBOR will fall in the coming years and who have enough financial reserves for possible fluctuations. APR is the most important indicator when comparing banks because it reveals the true cost of the loan. Bank of Slovenia data shows that interest rates are stabilising in 2026, but they remain at relatively high levels, which means a careful loan choice matters more than ever.