Consumer loan interest at the 20-year peak

Banking The sector continues to push up lending rates as the pressure on them has not eased sufficiently despite rational policies. Unprecedented rates have sprung up on consumer loans over the last 20 years. In the week ending July 7, the average interest rate for general purpose loans reported by banks to the Central Bank (CBRT) reached 47.95 percent per year. The last time such a high average rate was seen was in June 2003 (48.35 percent) in interest on consumer loans, which means 4 percent per month. Citizens who risk high interest rates cannot find loans even if they want to borrow at these rates. Banking
the system is clogged, cannot provide credit. The banking sector, mostly private banks, completely closed in June the credit taps that it had cut off in May.

DON’T LOSE ENOUGH

The CBRT held its first Monetary Policy Committee meeting, chaired by Gaye Erkan, on June 22 and it was decided to raise the policy interest rate from 8.5 percent to 15 percent. After the aforementioned decision, between June 23 and July 7, the average annual interest rate of consumer loans in banks increased 6.4 points to 47.95 percent, vehicle loans increased 7.2 points to 41.2 percent, home loans rose 4.3 points to 28.3, business loans rates rose 9.1 points to 24.5 percent. On the other hand, while interest rates on loans increase in banks, interest rates on deposits decrease. In those two weeks, the average interest rate on 3-month deposits fell from 42 percent to 37.8 percent. The sources stressed that the banking sector has increased lending rates because regulations have not been relaxed enough.

Hard brake on commercial credit

Although interest rates on commercial loans continued to rise rapidly, the loss of momentum in the growth rate also reached notable dimensions. According to the calculation made on the data of the Banking Regulation and Supervision Agency (BDDK), as of July 7, 13 weeks, the annualized and exchange rate-adjusted growth of commercial loans was 8.1 percent. During the monetary easing period, the growth rate had risen to 56.1 percent.