Credit and interest earthquake before the second round

Although the Central Bank (CBRT) kept the policy rate at 8.5 percent, interest rates rose sharply after May 14. The level of 40 percent in TL deposit interest and 50 percent in consumer loan interest was exceeded.

According to CBRT data, while the annual interest rate on consumer loans was 29.8 percent at the beginning of the year, it rose to 34.2 percent just before the May 14 election.

However, this week, interest rates on consumer loans at banks exceeded 40 percent. This rate has exceeded 50 percent in some banks. Along with additional costs, annual costs on consumer loans exceeded 100 percent at some banks.

At some banks, home loans rose as much as 3.5 percent a month, while car loans reached 4 percent.

AFTER THE ELECTIONS LOANS DECREASE BY 8.2 BILLION TL

Banks almost stopped lending after the measures taken by the CBRT.

TL loans, which increased by TL 102.1 billion in the week before the election, decreased by TL 8.2 billion in the week after the election.

The weekly average increase in TL loans since the beginning of the year was TL 70 billion.

DEPLETED RESERVE LOANS HIT

The CBRT’s steps to reduce credit taps and raise targets on foreign currency conversion to TL, the day after the May 14 election, confounded the market.

Following CBRT limitations on cash advances and overdraft accounts, whose reserves were depleted, banks closed their credit cards to cash advances; Limits on overdraft accounts, also known as flex accounts, have been lowered.

After the reactions, the CBRT took a step back in its decision, which had great repercussions in the market; It was announced that there would be no restrictions on the use of credit card cash advances and overdraft account loans.

However, although the CBRT takes a step back in its decision, which has a great impact on the market, the banks do not believe that this type of loan will reach its previous use.

Speaking to Reuters, one banker pointed out that banks still give limited cash advances, saying:

“People borrow cheap with cash advances and put up to 40 percent on deposits. Banks also do not want to lose a product that is in such high demand. Therefore, the banks had already stopped before the first decision of the Central Bank. Currently, it continues on a limited basis.”

The fact that the CBRT set an additional 10% target for the conversion of foreign currency accounts of real people to TL immediately after the election increased the interest on TL deposits rapidly, and this situation was effective in increasing rates from banks and close the credit taps. .