The National Bank of Serbia (NBS) has put forward for public consultation the draft Law on Financial Service Users, which introduces substantial changes to the regulation of interest rates and statutory default interest rates.
The draft proposes reducing the statutory default interest rate to 12% for obligations in dinars and 10.25% for obligations with an exchange rate clause in euros. The current general statutory default interest rate is 14% for dinars and 12.25% for euros.
The maximum value of interest rates will be determined with consideration for current market conditions. This will be influenced by the reference interest rates of the National Bank of Serbia and other central banks, as well as average market interest rates.
These measures are aligned with Directive 2023/2225, which requires member states to implement actions such as imposing caps to effectively prevent abuses and ensure that users are not charged excessively high interest rates or overall credit costs.
The interest rate caps are designed to prevent sudden increases in market rates from immediately affecting users and to ensure that abrupt market disruptions do not negatively impact consumers.
The draft law also includes special provisions for overdue monetary obligations of individuals. It proposes a lower statutory default interest rate for these obligations, set to be 2 percentage points lower than the general statutory default interest rate, or the sum of the reference interest rate of the National Bank of Serbia plus 6 percentage points.
For housing loans, the draft law suggests a cap on new loans with fixed and variable interest rates. This cap will be based on the average weighted interest rate for these loans plus 20%. For existing housing loans with variable interest rates, the proposed cap is 5.0% until December 31, 2026. After this date, the new cap of the average weighted rate plus 20% will apply.
To mitigate the impact of the transition from the temporary measure, the draft law proposes transitional provisions to prevent a sudden rise in interest rates for existing housing loans.
Additionally, the draft law imposes limits on the effective interest rate for new housing loans. This cap is set at the statutory default interest rate minus 2.5 percentage points, resulting in a maximum effective interest rate of 7.75% for new housing loans.
