Loans in Serbia will soon be cheaper, after National Bank of Serbia and the European Central Bank reduced their reference interest rates to the same extent - by 0,25 percentage points each, "Today" writes.
National Bank of Serbia lowered the interest rate to 5,75 percent, and the ECB to 3,5 percent.
Given that the key interest rate of the NBS refers to dinar loans, and the key rate of the ECB to loans in euros, a further decline in interest rates on loans to citizens and the economy can be expected.
The majority of housing loans in Serbia are indexed in euros and in their structure have Euribor, the interest rate on mutual loans of banks in euros. Euribor is precisely the path through which the reduction of the ECB's interest rate spills over into smaller loan installments for citizens.
A further drop in Euribor is expected
Since October 2, when the six-month Euribor reached 4,14 percent, the highest level since November 2008, it has fallen to around 3,3 percent, and given the move by the ECB, a further fall can be expected. Admittedly, given that the National Bank of Serbia has limited interest rates on housing loans, it is more likely that the decrease in Euribor will not immediately be reflected in smaller installments of housing loans.
The average interest rate on newly approved housing loans is 5,12 percent, which is at the level of the NBS limit that will last until the end of this year.
Amendment of two laws
The National Bank of Serbia is changing two laws that regulate banking sector operations and, by all accounts, is tightening its relationship with banks. These are the Law on Amendments to the Law on the National Bank of Serbia and the Draft New Law on the Protection of Users of Financial Services.
One that guarantees the protection of users, clients expect, but bankers do not look forward to; the other, which deals with the business itself, shareholders and creditors of banks, promises a slightly calmer dream, writes RTS.
Darko Stamenković, Director General of the Sector for the Control of Bank Operations at the NBS, told RTS that the key goals of these laws are to preserve and further improve the results achieved so far in terms of the stability of the financial system, the sustainable operation of banks, as well as the protection of users of financial services. in the following period.
"Last year, the National Bank of Serbia, acting in a situation of sudden and high growth of interest rates on housing loans, primarily established in the characteristics of the European Central Bank, reacted with a temporary measure, temporarily limiting interest rates on housing loans until the end of this year," he reminds.
However, the National Bank of Serbia is of the opinion that a permanent systemic measure is needed to regulate the market and interest rates on loans and credit products.
"In this sense, the National Bank of Serbia has foreseen certain restrictions on the maximum interest rate, not wanting to influence market trends, but with the aim of preventing excessive amounts of interest rates on individual loans and to prevent rapid growth, such as we had in the past year, on the example of housing loans - rapid growth that can negatively affect both the standard of living of citizens and the creditworthiness and, in the last case, the increase of problematic loans in banks", notes Stamenković.
Šoškić: Inflation is not too high
Core inflation, which excludes food, tobacco and energy prices that do not depend on monetary policy, remains above the target level. In August, according to NBS data, it was 5,2 percent and accelerated compared to the first half of the year.
The Central Bank now expects inflation to be four percent at the end of the year, which is an increase from 3,6 percent from the previous projection.
Dejan Šoškić, a professor at the Faculty of Economics in Belgrade, estimates that inflation of 4,3 percent is not too high for a developing country like Serbia.
"Reducing the interest rate makes sense if inflation is at that level, because it is essentially in the target corridor." By the way, in developing countries, inflation can be higher than two or three percent, as long as it is at the level of lower single digits. Admittedly, the reduction of the NBS interest rate will not have a great effect, since in our country both savings and loans are Euroized and the aggregate demand is more affected by the change in the interest rate of the European Central Bank. A reduction in the ECB interest rate would spill over into a reduction in interest rates on euro-linked loans in Serbia as well," notes Šoškić.
He points out that the rise in prices at the moment is not so much a problem for Serbia as the high level they reached in the previous period.
"In the previous period, there was a significant increase in prices," points out Šoškić. "The competent institutions should ask themselves why the price levels in Serbia, especially for basic needs such as food, are comparable to the prices in developed countries with much higher incomes." There is work for the antimonopoly commission and other institutions to remove bottlenecks or monopolization in import and export".
Source: Danas, RTS
