Bank disburses loans at both fixed and floating interest rates. By general rule, loan contracts with a term up to one year are concluded at fixed interest rate while floating interest rate can be used for loans contracts with a term exceeding one year.
If the base interest rate is 6 months EURIBOR, the bank will fix the changes of EURIBOR for the next six month period (interest rates will remain unchanged over this period); this is done twice a year, on the due date for interest payment of every sixth month, following the month for the conclusion of the contract, based on the EURIBOR applicable on the due date of interest payment. The parties to the contract will consider the EURIBOR rates, applicable on the date for the conclusion of contract, upon conclusion of a loan contract. The current six month EURIBOR and the history of interest rate changes is available from Internet at: www.euribor-ebf.eu
If the base interest rate is the Base Interest Rate of the bank, the bank will fix the changes of Base Interest Rate for one month period (interest rates will remain unchanged over this period); his will be done once per month, on the due date for interest payment of every consecutive month, based on the Base Interest Rate, valid on the due date of interest payment. When assigning the Base Interest Rate, the bank will consider general interest rate level at inter-bank money market, expected interest rate levels, legal environment, envisioned inflation and general development trends of the economy that will all influence the actual and expected expenditures incurring for banks if loan funds are involved. As the base interest rate will provide a more accurate reflection of the real value of bank’s resources, the margin, added to Base Interest Rate, is usually much lower than the rate applicable to loans, linked to EURIBOR. Also, regardless of the shorter fixing period, the fluctuation amplitude of Base Interest Rate is, by general rule, much smaller than in the case of EURIBOR.
If floating interest rate has been specified in contract, the bank will allow clients that do not agree with changing interest rates and have notified the bank of such a fact, to cancel their loan contract on extraordinary grounds, without exercising the penalty fines for premature repayment of the loan, provided that the bank has received an appropriate written notice no later than within three months as of the receipt of a notice on Base Interest Rate changes.
The current Base Interest Rate, applied by the Bank is 1.25% (effective as of 01.03.2016).