Starting this autumn, new caps on interest rates for housing loans, personal loans, credit cards and overdrafts will be implemented, announced Jorgovanka Tabaković, Governor of the National Bank of Serbia (NBS). The upcoming Financial Services Protection Law will propose these caps for the first time.
A public consultation on this legislation will be held soon. Although the NBS has not yet specified the exact limits for these rates, they will be based on the average weighted interest rate as detailed in the proposed calculation formula.
The NBS explains that the goal of these caps is twofold. Firstly, they aim to protect consumers from excessively high interest rates. Secondly, by linking the maximum allowable rate to the average weighted rate with an additional margin, the measure seeks to prevent sudden spikes in rates. The effective interest rate cap will also ensure that banks cannot bypass these limits by increasing other loan fees.
This new cap will benefit those with variable-rate housing loans, as the temporary measure limiting these rates from September of the previous year will be made permanent. This decision has already led to a reduction in the average weighted interest rate on housing loans, facilitating the implementation of the new cap with minimal fluctuations.
The caps will also apply to personal loans, credit cards, and overdrafts, addressing concerns highlighted by EU directives to prevent high interest rates. These limits will be linked to the average weighted rate and the statutory default interest rate, which is influenced by the NBS’s reference rate. This linkage will allow the reference rate to more directly and effectively impact the interest rates on these financial products.
