Individual loan rates skyrocketed at public banks

The first interest rate increase by the Central Bank after a two-year hiatus had a strong impact on interest rates on housing and consumer loans from public banks.

Private banks, for their part, began to reopen in a limited way retail loans that had almost closed during the electoral period, after the relaxation of regulations, and which remained at high levels.

INTEREST ON HOME LOANS INCREASES UP TO 2.4 PERCENT

While interest rates for home loans of up to TL 500,000 in public banks increased from 1.39% to 1.99%, interest rates for home loans of TL 2 million or more increased by 2.4% per month in some public banks.

Public banks’ general purpose loan ratios also increased from 1.89 percent to 2.64 percent.

A banking source said that after the interest rate increase, public banks raised rates on individual loans, “however, limited use continues.”

THE CENTER BEGINS TO TAKE SIMPLIFICATION STEPS

While the CBRT raised the policy rate from 8.5 percent to 15 percent on June 22, the bank, which considered raising the interest rate as the “first step,” said the tightening process will continue. until a significant improvement in the inflation outlook is achieved. .

The CBRT also began to take gradual simplification measures in the macro framework.

As a first step of simplification, the CBRT reduced the provisions that banks must apply according to the TL share from the band of 3 to 17 percent before the regulation to the band of 3 to 12 percent. This step had reduced the TL deposit run.

INCREASE TO 5 PERCENT IN PRIVATE BANKS

On the other hand, private banks reopened their personal loans of TL70,000 and above, which had been halted due to the measures taken by the CBRT in the last two years and the additional obligations imposed on banks, including the obligation to hold securities. . In some banks, consumer loans of more than 70,000 TL began to be granted with a monthly interest rate of 5 percent, while the interest rate for housing loans increased to above 3 percent per month.

Another banking source said: “We see that the loan market, which was almost closed after the elections, is starting to reopen. Between the two elections, the credits almost stopped. Now this will gradually reverse,” he said.

COMMERCIAL LENDING LIGHTWEIGHT

The bankers noted that the business loan market is moving slowly and said that with the simplification steps, they turned to revolving loans instead of cash loans. The bankers say that raising interest rates from 13 to 22 percent is not enough for banks to further open their credit channels, and that the rate must be raised.

With the regulation of holding bonds above a certain interest rate on commercial loans, the CBRT is in a position to determine the highest interest rate that the industry can use on commercial loans.

After the CBRT interest rate decision, with the regulation of the Official Gazette, the reference interest rate on these accounts was changed from 0.81 percent to 1.36 percent for July. This step led to an increase in the upper interest limits on commercial loans. (Reuters)