On September 1, 2024, a new law will come into effect, introducing restrictions on changing floating interest rates for loans and credits. The State Duma approved this law in its second and third readings.
The implementation of this law aims to reduce the risks for citizens and small businesses associated with variable rates. The initial draft of the law proposed a complete abolition of floating rates on consumer loans and mortgages for terms exceeding 20 years. However, this idea was abandoned in the second reading.
Under the new law, there are only two scenarios in which floating rate loans can be issued to individuals. The first scenario allows for mortgages with terms not exceeding 20 years and amounts ranging from 200 to 1,000 average monthly salaries. The rate change is capped at one-third, with an increase limit of 4 percentage points. The second scenario permits regular consumer loans exceeding 200 times the average monthly salary, with no restrictions on the loan term or allowable rate changes.
The first set of restrictions also applies to loans for micro-enterprises. In both cases, banks must notify clients of any rate changes 15 days in advance.
Certain micro-enterprises will be exempt from these restrictions. For example, companies operating in specific sectors listed by the government will not be subject to these limitations. Additionally, the new law will not apply to loans obtained by micro-enterprises under government programs.
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