Seb increased the refinancing rate by 0.25%, as a result, the mortgage loan will become more expensive

Georgia's Central Bank Raises Key Rate Amid Regional Economic Pressures

Georgia's National Bank took decisive action on May 6, 2026, when its monetary policy committee approved an increase in the refinancing rate of 0.25 percentage points, raising it to 8.25 percent. This decision affects the cost of borrowing throughout the country and will have direct implications for consumers seeking mortgages on residential properties.

The refinancing rate is the interest rate at which the central bank lends money to commercial banks. When this rate rises, borrowing becomes more expensive for financial institutions. Banks respond by raising the interest rates they charge consumers for mortgages, making home loans increasingly costly for ordinary Georgians throughout the country seeking to purchase property.

The central bank attributed the rate increase to deteriorating geopolitical conditions in the Middle East. Prolonged disruptions to shipping through the Strait of Hormuz have triggered a fresh supply shock affecting global inflation. Oil and energy prices have surged on international markets, already contributing to higher worldwide inflation. These elevated production costs pose substantial inflationary pressures going forward.

The impact on Georgia's economy is immediate and tangible. Fuel prices have already increased at domestic pumps, reflecting international trends. April inflation reached 5.9 percent, significantly exceeding the central bank's 3 percent target. Core inflation, excluding food, energy, and tobacco, stood at 3.2 percent, while service inflation climbed to 3.7 percent. Though these core measures remain relatively close to the target, accelerating trends suggest mounting risks of secondary inflation effects that could become difficult to contain.