NewsMontenegro's banking sector initiates loan rate reductions to boost consumer welfare

Montenegro’s banking sector initiates loan rate reductions to boost consumer welfare

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Montenegro’s banking sector has recently undergone significant changes, with most banks slashing their interest rates on various types of loans. Data from four major Montenegrin banks reveal reductions ranging from 0.4 to 1.5 percentage points on housing, personal, mortgage cash, and mobile app-based loans for retirees. This adjustment follows discussions with the Central Bank of Montenegro (CBCG) two weeks ago, signaling a concerted effort to support citizens’ living standards.

These rate cuts, effective until the end of 2024 in most cases, aim to ease financial burdens on borrowers. However, it’s essential for customers to directly inquire about the new rates and conditions, as each bank may have different adjustments across its loan offerings.

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The CBCG’s recent initiative with commercial banks underscores a commitment to consumer welfare. Amendments to the Decision on the Calculation and Disclosure of the Effective Interest Rate (EIR) will enhance transparency by publishing a list of consumer loans on the CBCG website. This move empowers citizens to compare loan options easily, fostering informed decision-making.

Despite last year’s net profit of EUR 146 million for Montenegrin banks, rising interest rates, fees, and commissions necessitated these adjustments.

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The Commercial Bank of Montenegro (CKB) introduced favorable terms on their popular loans from March 20, offering special rates for young homebuyers and reduced rates on personal loans until year-end. Similarly, Erste Bank launched a promotion this week with lower rates, particularly targeting retirees, offering reduced rates and free insurance.

Lovćen Bank focused on retirees, reducing interest rates on cash loans and “fair loans” for older citizens until the year’s end. Addiko Bank, recognizing retirees’ vulnerability, lowered rates by up to 1.4 percentage points and offered free insurance. Moreover, they simplified loan acquisition through mobile apps.

Hipotekarna Bank, aligning with CBCG recommendations, further reduced rates on four key loan products, catering to retirees, students, and the unemployed. These adjustments, up to two percent lower, apply to new loans until December 2024.

In conclusion, Montenegro’s banking sector’s recent rate cuts aim to alleviate financial pressures on citizens, with transparency measures enhancing consumer choice and empowerment.

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