The National Bank of Serbia (NBS) announced that its recent decision to cap interest rates, along with the new Law on the Protection of Financial Services Users, marks an important step toward greater transparency, fairness, and security in the financial market. According to Nevena Sokolović, head of the Banking Operations Control Sector at NBS, interest rate caps have reduced installments on existing housing loans by 10 to 25 percent, significantly easing repayment for borrowers.
Sokolović explained that following the European Central Bank’s monetary tightening since mid-2022, which raised base interest rates by 4.5 percentage points, interest rates on euro-indexed loans increased substantially in Serbia. In response, NBS decided in September 2023 to limit interest rates on largely euro-indexed housing loans until the end of 2024.
In December 2024, NBS adopted a temporary decision extending the cap on interest rates for consumer loans with individuals, aligning with provisions of the new Law on the Protection of Financial Services Users.
The new law permanently regulates interest rate caps not only for housing loans but also for other credit products such as cash loans, consumer loans, credit cards, and overdrafts. It sets a 5 percent cap on both fixed and variable interest rates for new housing loans until the end of 2025.
During the transition period of 2026 and 2027, the maximum variable rate on housing loans will be the weighted average rate on those loans plus one-fifth, while fixed-rate loans will have their average new fixed interest rates increased accordingly. From 2028 onwards, this increase will be one-quarter of the average rate, representing one of the strictest caps compared to other countries, where increases may be up to one-third.
The law also introduced a lower penalty interest rate on overdue monetary obligations for individuals, two percentage points below the general statutory penalty rate.
Furthermore, the effective interest rate on housing loans, which includes all loan-related costs, cannot exceed the penalty interest rate reduced by 2.5 percentage points, preventing lenders from bypassing nominal rate caps through additional fees.
Since implementing these measures, the nominal interest rate on new euro-denominated housing loans has remained around 5 percent until March 2025. For existing loans, rates have stayed near 4.5 to 5 percent since September 2023.
Interest rates on dinar credit card debts fell from 22.9 percent in December 2024 to 15.8 percent in March 2025, while overdraft rates dropped from 29.1 percent to 18.5 percent in the same period.
Thanks to these caps, installment payments on existing housing loans have decreased, new loans have become more affordable, and the growth of problematic loans has been curbed. The share of non-performing housing loans fell from 1.7 percent at the introduction of the caps to 1.26 percent by March 2025.
