“Usury rate” for property loans to individuals revised upwards (April 2023)

Sovereign Order No. 9.866 du 19 avril 2023 (JDM No. 8640 of 28 April 2023) repeals and replaces Article 2 of Sovereign Order No. 2.271 of 6 July 2009 relating to the determination of the usury rate.

The usury rate is raised from 2.13% to 3.44% for property loans to individuals.

The average rate charged by lenders is thus set at :

— For individuals:

• Overdrafts: 14.88 (unchanged)
• Personal loans: 3.32 (unchanged)
• Property loans: 3.44

— For businesses and individual entrepreneurs:

• Overdrafts: 8.36 (unchanged)

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Sanctions for abuse :

Article 357 of the Penal Code punishes the use of an effective interest rate that exceeds by more than half the average rate charged under the same conditions by bona fide lenders for credit transactions involving the same risks as the loan in question, with a fine of Euros 9,000 to 18,000.

Excessive collections shall be deducted by operation of law from the normal interest due on the day of the proceedings and, alternatively, from the capital of the claim.

If the debt is extinguished in capital and interest, the lender shall be ordered to return to the borrower the sums wrongly collected, with interest from the day of their collection.

The usury rate should not be confused with the legal interest rate (set at 1% by Order No. 5.444 of 6 August 2015), which is used to calculate interest on sums payable in the event of a delay in payment ordered by a court decision.