Clifford Chance
Sudden change to the Usury rules
12 August 2011
The Italian Government approved a new set of measures under Law
Decree No. 70 dated 13 May 2011, to encourage the development and
growth of the economy (so-called "decreto sviluppo"). One of these
measures amends the existing legislative framework regulating interest
rate restrictions in Italy, by changing the method for calculating the
interest rate thresholds. This amendment will result in an overall
increase of the usury threshold for mortgage loans but also, to a lesser
degree, for other types of lending in Italy, subject to certain upper limits.
The amendment introduces additional headroom but does not overcome
the issues arising from the interpretation of the existing rules on usury,
pursuant to which, the usury thresholds fail to take into account risk
factors such as the profile risk of the borrower or the nature of the
financing. The change will primarily impact upon mortgage loan
transactions which were at risk of exceeding the interest rate threshold
determined under the existing rules on usury and the low interest rates
in the current market (which are now predicted to increase).
