Hard brake on consumer loans from banks

Center Just as the link between the Bank Determined Policy Rate (CBRT) and market rates is completely broken, regulations that force lower rates on ‘back door’ loans also have the opposite effect. With the letter sent to the banks on March 10, the CBRT began to apply the ‘hidden interest limit’, which it had previously put in place for commercial loans, also for consumer loans. According to the regulation, the highest monthly interest, which will not be covered by securities, must be at the level of 1.37 percent (18.56 percent per year). However, this regulation, which forced banks to choose between low interest rates and buying securities, led to an unprecedented jump in interest rates in one week. Banks, which increased the interest on consumer loans, also strongly curbed the use of consumer loans, which increased especially after the earthquake disaster. Thus, while the government wanted to create a wave of credit before the elections, the loss of purchasing power created by rising inflation made it difficult for those who resorted to consumer loans to access credit.

INCREASE OF 3.8 POINTS

According to data from the Central Bank, in the first week of March, the weighted average interest rate on consumer loans fell to 25.47 percent from last year’s peak of 35.41 percent in July. The average interest rate on consumer loans, which was 26.48 percent in the week ending March 10, started to rise again with the ‘upper cap’ of CBRT interest rates. Consumer loan interest rates increased 3.8 points to 30.35 percent on average in the week of March 17, registering the fastest increase since April 2002. Thus, the current interest rate increased by 62 percent above the upper limit of 18.56 percent set by the CBRT. According to weekly data from the Banking Supervision and Regulation Agency (BDDK), the volume of consumer loans increased by TL 2.79 billion in the week ending March 17 to TL 795 billion.

Locked in business loan financing too

■ Center According to the regulation made by the Bank, banks that apply compound interest between 18.56 percent and 20.62 percent for consumer loans are required to buy 20 percent of the new credit they create, in government bonds. denominated in lire. If banks charge a higher interest rate on loans, the amount of government bonds they need to buy equals 90 percent of the loan they create. Frontier banks, which previously charged commercial lending rates, forced them to choose between lending at low interest rates or buying bonds at low interest rates and lending at increased risk. Banks, not wanting to risk risk on their balance sheets, also stopped commercial lending.