A 25-basis-point increase in European Central Bank key interest rates has pushed Euribor to its highest level since the beginning of 2026, raising repayment costs for Serbian borrowers with variable-rate euro-linked loans. The increase is expected to add approximately €15 to monthly repayments for every €100,000 of outstanding debt. The actual effect varies according to the loan agreement, maturity, interest margin and timing of the next rate adjustment.
Euro-linked loans transmit higher rates
The immediate effect is smaller for borrowers with lower outstanding balances, but repeated rate increases can create a larger cumulative burden. Households already facing higher food, energy and transport costs have less disposable income available for other spending. Serbia’s banking market is particularly exposed to euro-area interest rates because a significant share of housing and corporate loans is denominated in or indexed to the euro. Changes in Euribor therefore feed relatively quickly into domestic borrowing costs.
Mortgage costs affect housing demand
Higher financing costs can reduce mortgage demand and weaken housing affordability, placing pressure on property prices in segments that depend heavily on leveraged buyers. Property developers also face the effects through potentially weaker pre-sales and higher costs for project financing, affecting the economics of new developments.
Companies face higher refinancing costs
Corporate borrowers are similarly exposed as they refinance existing liabilities or finance new investments at higher interest rates. Increased interest expenses reduce project returns and can lead companies to delay expansion plans and new investments.
Banks balance higher income with credit risks
Serbian banks benefit from increased interest income as borrowing costs rise, while simultaneously monitoring credit quality. A prolonged period of elevated interest rates could increase repayment difficulties among highly leveraged households and smaller companies with limited cash reserves.
