After a period that lasted more than two years, during which the National Bank of Serbia froze housing loan instalments through direct interventions, borrowers are facing a new reality in 2026. They are now most concerned about whether loans will suddenly become more expensive after the expiry of this measure and thereby threaten their household budgets.
Until 1 January, housing loan users were under the direct protection of the National Bank of Serbia through temporary measures that kept their interest rates frozen, based on the Decision on the Temporary Limitation of Interest Rates on Housing Loans, which served as a short-term shield against a sudden rise in interest rates caused by changes in global markets. The good news for bank borrowers is that with the expiry of the regulation their protection did not disappear, but from 1 January this year it took a different, but permanent form through the Law on the Protection of Users of Financial Services, which protects them through the so-called maximum cap mechanism.
The law limits the maximum interest rate to the average weighted rate increased by one fifth, preventing banks from independently raising their margins to extreme levels.
How housing loan interest rates and instalments increased
It should be recalled that back in September 2023 the National Bank of Serbia adopted the Decision on Temporary Measures for Banks relating to housing loans, which limited the interest rate for borrowers. This decision, which remained in force until the end of 2024, was adopted with the aim of easing, during a period of heightened uncertainty on international financial markets, the transmission of the sharp increase in interest rates on the European money market to the obligations of citizens in Serbia under housing loans with variable interest rates.
At the beginning of 2022, the six-month Euribor rate stood at minus 0.539 percent, while by September 2023 it had risen to as much as 3.934 percent, making it more difficult for citizens to repay their housing loan instalments. In practical terms, someone who had agreed an interest rate of, for example, 2.5 percent plus the six-month Euribor at the beginning of 2022 was paying interest slightly below 2 percent, while by September 2023 their interest rate had reached 6.43 percent. In the case of a housing loan of 100,000 euros, with a 20 percent down payment and a repayment period of 30 years, this meant that the instalment was 296 euros in the first case, while by September 2023 it had reached just over 500 euros.
Through regulatory measures of the National Bank of Serbia, the sudden rise in Euribor rates was prevented from being transferred directly to housing loan instalments and negatively affecting the living standard of citizens, so the interest rate was frozen at five percent. In the previous example this meant that the instalment, instead of 500 euros, was 430 euros.
It should also be noted that after the initial freeze Euribor continued to rise, so the measures prevented an additional surge in interest rates and repayment instalments.
The decision on the freeze remained in force until the adoption of the new Law on the Protection of Users of Financial Services, which was adopted at the proposal of the National Bank of Serbia, entered into force in March 2025 and began to apply from 1 January this year. The adoption of this law aimed to systematically regulate the limitation of interest rates on loans, primarily for housing loan users but also for users of all other credit products offered by banks. In addition, the law ensures predictability of borrowing costs, limits the risk of a sudden increase in citizens’ obligations and further encourages responsible lending.
In the meantime, market conditions have changed, taking into account changes in the monetary policy of the European Central Bank. After the previous increase in key interest rates by most central banks in response to global inflation, a trend of their reduction has been recorded. On that basis, interest rates on the euro money market have also decreased. Specifically, the six-month Euribor fell from a maximum of 4.1 percent at the end of 2023 to around 2.1 percent by mid-2025 and has remained stable since then.
This has enabled a gradual transition towards market conditions without sudden disruptions for borrowers. Instead of a fixed upper limit, the Law on the Protection of Users of Financial Services, starting from 1 January 2026, prescribes that market movements in interest rates must be taken into account when determining the upper limits for housing loan interest rates.
Housing loans with fixed and variable interest rates – new rules
Specifically, in the case of housing loans with a contracted variable interest rate, the nominal interest rate may not exceed the average weighted interest rate on existing loan agreements of the same type and in the same currency (indexation), increased by one fifth. This rule applies from 1 January 2026 until the end of 2027, after which the corridor of maximum increase compared with the average weighted rate will amount to one quarter.
In the case of housing loans with a contracted fixed interest rate, as the National Bank of Serbia told NIN, from 1 January 2026 until 31 December 2027 the nominal interest rate on such loans may not be agreed at a level higher than the average weighted interest rate on new loan agreements of the same type in the same currency (indexation), increased by one fifth. From 1 January 2028, the nominal interest rate on such loans may not be agreed at a level higher than the average weighted nominal interest rate on new loan agreements of the same type in the same currency (indexation), increased by one quarter.
How interest on housing loans is now calculated
The National Bank of Serbia calculates and publishes on its website twice a year the average weighted interest rate on housing loans, and at the same time publishes the maximum permitted nominal interest rate for housing loans with variable and fixed interest rates in dinars and in foreign currency. This means that the interest rate for borrowers may change at most twice a year.
For example, in the period from 1 January 2026 to 31 May 2026, the nominal interest rate on housing loans indexed in euros with a variable interest rate must not exceed 5.88 percent (an average weighted interest rate of 4.90 percent increased by one fifth), while the nominal interest rate on newly agreed housing loans indexed in euros with a fixed interest rate must not exceed 5.18 percent (an average weighted interest rate of 4.32 percent increased by one fifth).
“According to data for January 2026, the interest rate on newly approved housing loans amounted to 4.5 percent, and we emphasise that current levels are still significantly below the applicable limit prescribed by the Law on the Protection of Users of Financial Services. In addition, taking into account current inflation trends in the eurozone, it is expected that housing loan interest rates will remain at a lower level than the maximum permitted rate in the coming period. Furthermore, the law also limits the effective interest rate on housing loans, which may not be higher than the statutory default interest rate from this law reduced by 2.5 percentage points. In addition to the nominal interest rate, the effective interest rate includes all additional costs related to the loan. By introducing a limit on the effective interest rate, the charging of additional fees that could circumvent the limitation of the nominal interest rate has been prevented. Currently, the maximum effective interest rate at the moment of concluding the contract amounts to 5.65 percent, which means that when concluding a housing loan contract the interest rate, including all additional loan-related costs, cannot exceed 5.65 percent,” the NBS explains, adding that available data indicate that all the goals set by the adoption of the law have been achieved.
What if Euribor rises sharply
The National Bank of Serbia points out that banks are prevented from charging excessively high interest rates to users of financial services. In the event of a sudden increase in interest rates, as was the case in 2022 and 2023, the growth of loan instalments slows down, giving borrowers more time to adjust to possible major market changes. The NBS also notes that this encourages lending with fixed interest rates.
“If Euribor were to rise sharply in the future, this increase would not automatically and immediately be reflected in the rise of nominal interest rates on euro-indexed housing loans. In the case of loans with variable interest rates, the dynamics of adjusting the nominal interest rate to Euribor movements are defined by the contract,” the NBS states.
For loans with a fixed interest rate, the nominal interest rate remains unchanged throughout the entire repayment period, so movements in Euribor do not affect its level. Citizens who wish to change the repayment conditions of their loan, for example to switch from a variable to a fixed interest rate, may submit a request to their bank or refinance the loan with another bank that offers the desired type of loan.
“In accordance with the law, if the amount of early repayment within a period of twelve months exceeds 1,200,000 dinars, the lender may charge a fee for early repayment of up to 1 percent of the amount of the prematurely repaid loan, provided that the period between the early repayment and the maturity of the obligation under the loan contract is longer than one year. If this period is shorter, the fee may not exceed 0.5 percent of the amount of the prematurely repaid loan. With these systemic amendments to the law, borrowers are able to adapt more easily to possible major market changes, which further contributes to their protection,” the NBS states, adding that thanks to the new law, more stable and predictable borrowing by citizens can be expected in the coming period, with a reduced likelihood of sudden changes in monthly loan obligations.
Therefore, even if a worst-case scenario occurs and Euribor suddenly rises for some reason, housing loan users in Serbia should know that their instalments can no longer skyrocket. Even if a bank demands much higher rates under its contract, it must, by law, stop further growth of the total interest rate. Everyone will also have the right to request from their bank that their instalment be fixed at a certain level for several years, or simply switch to another bank offering better conditions without paying expensive penalties.
The interest rate freeze has ended, but citizens are not unprotected
That this is indeed the case was confirmed to NIN by Zoran Grubišić, dean of the Belgrade Banking Academy.
“After the decisions of the National Bank of Serbia on temporary measures for housing loans ceased to apply, citizens who use them were not left unprotected. In other words, they will still be spared large increases in the instalments they repay. Protection certainly remains, but it is now regulated in a different way, through the law that began to apply on 1 January,” our interlocutor explains.
Financial consultant Vladimir Vasić told NIN that the measures of the National Bank of Serbia were adopted in order to protect Serbian citizens who pay loan instalments from the rapid spillover of the crisis from the European market.
“This was initially achieved through a regulation, and now it is ensured by the law that came into force on 1 January. If, for example, the war in the Middle East were to last for a longer period, banks as institutions that deal with risk management might decide to raise interest rates. However, given the existing legal solutions in Serbia and the fact that the National Bank of Serbia determines the maximum interest rates twice a year using a mathematical formula, clients are still protected from the rise in Euribor. When I say protected, I mean that their instalments increase by a smaller percentage than would be the case if the legal limitation did not exist. In this way instalments rise by a smaller amount than they would if this legal protection did not exist,” our interlocutor concludes.
(NIN, 13.03.2026)