The National Bank of Serbia (NBS) has announced a significant decision to impose caps on interest rates, coinciding with new legislation aimed at protecting financial service users.

This initiative represents a notable advancement towards increased transparency, fairness, and security within the financial market.

Nevena Sokolović, head of the Banking Operations Control Department at the NBS, stated that the introduction of interest rate caps has led to a reduction in monthly installments on existing mortgage loans by between 10% and 25%, thus facilitating the repayment of these loans.

Sokolović emphasized that at the beginning of the year, the three-month and six-month Euribor rates, to which many variable-rate loans are tied, were at 2.7% and 2.6%, respectively.

With an average margin of three percentage points for mortgage loans, if the new legislative measures had not been introduced, interest rates on existing variable-rate mortgages would have automatically increased to approximately 5.6% to 5.7%.

Furthermore, the NBS provides data on maximum nominal interest rates for loans to individuals twice a year, specifically on June 1 and December 1. The maximum effective interest rates are published following any changes to the reference rates of the NBS and the European Central Bank (ECB).

Banks are required to implement these caps within 15 days of the announcement.

According to Sokolović, the capping of interest rates on mortgage loans has decreased payments for existing loans, made new loans more accessible, and restrained the potential rise of non-performing loans.

This is supported by the data indicating that the share of non-performing loans in total residential mortgages was 1.7% when the initial decision to impose interest rate caps was made, which has since gradually declined to 1.26% by March 2025.

As a result of the interest rate limits, residential loans saw an increase of nearly 8% in 2024, which is equivalent to 45 billion dinars, with an annual growth rate accelerating to 9.6% by March 2025.

The maximum nominal interest rate for cash and consumer loans denominated in dinars is set at 14.08% until May 31, 2025. The latest limitation on these rates was published on the NBS website on June 1. The current maximum effective interest rate stands at 15.75%, above the prevailing market rates, serving as protection against the imposition of excessively high interest rates.

For credit cards, the effective interest rate is capped at 17.75%.

In instances of allowed and unauthorized overdrafts on current accounts, a cap of 19.75% applies.

Sokolović reported that the interest rate on credit card debt in dinars has reduced from 22.9% in December 2024 to 15.8% in March this year, marking a decrease of seven percentage points.

The reduction for overdrafts was even more significant, dropping almost 11 percentage points from 29.1% in December 2024 to 18.5% in March 2025.

Sokolović characterized these reductions as a crucial step in preventing the charging of excessively high interest rates, as users of this costly form of borrowing have experienced a drop in interest rates of over 30% compared to previous levels applied by banks.