National Bank of Serbia imposes temporary caps on retail lending rates including a 5% limit on housing loans

The National Bank of Serbia published an explainer of its Decision on the temporary limitation of interest rates in loan agreements with natural persons, adopted by its Executive Board on 20 December 2024. The Decision extends the earlier housing-loan measure and, for the first time, introduces caps for other consumer credit products, applying on a temporary basis until the new Law on the Protection of Financial Services Users is adopted and no later than end-2025. For housing loans, the Decision caps the nominal rate at 5% for existing variable-rate loans and sets a 5% cap for new housing loans with either variable or fixed rates, alongside an effective interest rate cap (including costs) that currently cannot exceed 6.65%; banks must provide affected variable-rate borrowers with a notice and a revised repayment schedule before the instalment due date. For dinar cash and consumer loans, the variable nominal rate is capped at 14.75% and the effective rate at 15.75%; credit cards are capped at a 17.75% effective rate; permitted and unauthorised overdrafts are capped at a 19.75% effective rate, with the limits applying to newly approved products and to existing cards and overdrafts when extended. The explainer also quantifies expected effects, including average housing-instalment savings of 6% to 10% versus an average market rate of around 5.6% in the absence of the measure, and reductions of up to 30% for overdrafts and about 20% for credit cards compared with existing market rates. The draft law underpinning a permanent framework for rate caps is expected to reach the National Assembly agenda soon, and the explainer notes that a falling six-month EURIBOR level of 2.57% supports expectations of a gradual transition back to market rates as the temporary measure ends.