How Are Consumer Credits Affected by New Government Requirements?

The government has tightened the rules on how lending and marketing can be conducted for consumer credits. As of March 1, 2025, new measures were introduced to prevent over-indebtedness and strengthen consumer protection against risky lending practices. It is assessed that it has been far too easy to be granted high-interest quick loans, and now lenders are expected to take greater responsibility.

Among the measures, the interest rate cap has been lowered from 40% to 20% above the reference rate*, the cost ceiling has been extended to all consumer credits, and a fee cap of 1% of the price base amount for setup fees has been introduced. The possibility of extending the loan term more than once has also been abolished, while the marketing of new consumer credits has been tightened with clearer requirements on how costs and risks should be presented.

Since the new requirements came into effect, the average interest rate on quick loans has decreased by about ten percentage points — from around 32–33% to approximately 22–23%, according to the interest rate history on the comparison site Mysteps.

Tighter Credit Assessment Makes It Harder to Get Loans

As lenders can no longer charge such high interest rates, this also affects borrowers' chances of obtaining loans. However, some lenders are trying to circumvent the interest rate cap by adding extra fees – e.g., setup fees, withdrawal fees, or invoice fees – which effectively raise the actual cost of the loan without violating the formal interest rate cap.

Lenders are pressured to be stricter in their credit assessments and not lend to borrowers with low creditworthiness to the same extent as before. It is also common for banks and lenders to start using Open Banking and AI technology, where they analyze bank transactions to gain better decision-making data, which can reduce the company's credit losses.

Upcoming Requirements for Lenders – How the Market Will Be Affected

Despite extensive criticism from the industry and the Council on Legislation, a new strengthened consumer protection in the credit market was introduced. Starting July 1, 2026, only credit institutions will be allowed to provide or mediate consumer credits. It is estimated that about 65 consumer credit institutions will be affected by the new regulations. This means that both lenders and loan brokers must apply for a banking license from the Financial Supervisory Authority to be exempt from the repealed law regarding certain activities with consumer credits.

Experts predict that many small lenders and loan brokers will need to shut down their operations as the application process for a banking license imposes high demands on capital, organization, and risk management.

According to a previous statement from the Social Democrats, they want to take it a step further and introduce a waiting period for quick loans and small credits. From being able to receive a loan disbursed directly in 15 minutes, they want to implement a waiting period of 24 hours from approved application to disbursement. To counter impulsive decisions, borrowers should be able to cancel their loan agreement during this waiting period.

Tighter Consumer Credit Regulations – But Easing for Mortgage Loans

Unlike consumer credits, it has been difficult for young people to enter the mortgage market due to the tightened amortization requirements introduced in 2018. Recently, the government proposed several changes to amortization requirements and mortgage caps. The previously tightened amortization requirements, where extra amortization is required for those who borrow more than 4.5 times the household's annual income, will be removed. It is also proposed to raise the mortgage cap from 85% to 90%. The legislative changes are proposed to take effect on April 1, 2026.

*The reference rate is determined once every six months and corresponds to the policy rate at the end of the previous six-month period rounded up to the nearest higher half percentage point.