The Italian parliament approved an amended version of a government decree which was issued in December 2000 to calm down concerns regarding the banking sector following a ruling by the Italian Supreme Court (Corte di Cassazione) on an application of the 1996 Usury Law. The law clarifies that a fixed interest rate on a loan cannot be deemed to be usurious, if it is not at the time the loan is entered into (as long as the rate is not renegotiated upwards in the meantime).
However, the law obligates banks to renegotiate interest rates on outstanding fixed-rate loans to levels at, or below, the new usury rates: 9.96% for all mortgage holders, with the exception of first-time buyers with loans of up to ITL150 million (US$72,250), approximately (interest rates for these mortgages are legally capped at 8%), approximately.
Despite the negative impact of lowering the rate that can be charged on fixed-rate loans, the law is positive for securitization because it clarifies and quantifies the usury issue.
