Household deposit rates fall faster than consumer loans
The annual decrease in Bulgaria's local-currency household deposits was nearly thrice that on consumer loans in July, according to the latest data by the Bulgarian National Bank (BNB). Interest rates have been melting away for around a year now but on loans they have been coming down less, with only minor changes recorded on monthly bases.
Furthermore, July brought a reduction month-on-month on the interest rates on new lev-denominated and euro-denominated business loans. At the same time, term corporate deposits have grown more expensive, shifting from the predominantly downward movement since the beginning of the year. For housing loans, the interest rates were higher for loans in the local currency and lower for those in the single currency. The interest rates on new corporate loans have slipped by an average of 0.04 percentage points in July compared with June, reaching 9.18% for levs and 7.93% for euros, respectively.
The monthly reduction in the rates of term household deposits is sharper, to 5.92% for levs and 4.90% for euros. On an year-on-year basis, the decrease is 35.14% and 29.8%, respectively. This compares with a respective 26% and 23% in June. Thus the gap between the pace of deposit rate reduction and the rate of consumer loan decline continues to grow. After peaking at 14.22% last June, lev-denominated consumer loans have shed nearly 2 percentage points, which makes an annual reduction of 12.3%, almost thrice lower than the pace at which local-currency household deposits are falling.