Interest rates on loans and deposits are key indicators of a country’s financial health. In Bulgaria, as in many other countries, they are subject to a variety of factors, including economic development, inflation, central bank policy and global economic conditions.
According to the BNB data, which reports the movements for the second quarter of this year, Bulgaria so far remains among the countries where savings are cheap, but there is almost no return on savings, whether we are talking about companies or individuals. The interest rate policy on ĸpediĸcipation currently remains unchanged.
The average interest rate on residential mortgages remains close to 2.5%. Deviations over the period are almost symbolic – not exceeding 0.06 percentage points either upwards or downwards.
As an example, the average interest rate on home loans in April compared to March decreased by 0.06 percentage points (2.49%). In May, the opposite trend was noted – it increased by 0.02 percentage points (2.51%).
The situation is also similar for post-petition loans. However, the level there is significantly higher – around 9%.
As an example, the average interest rate on ppebitcĸite loans in April has increased by 0.04 percentage points (8.25%). In the following month it increased significantly – 0.77 percentage points (9.02%). On the other hand, in the month of June a was recorded – 0,07 percentage points (8,95%).
The same trend can be observed in the case of the BGN deposits of private individuals. The level of the average interest rate in these deposits failed to exceed 1% based on the whole year. In April, the interest rate approached this limit after an increase of 0.24 percentage points (0.97%). In the following month, however, the rate moved down again – 0.21 percentage points (0.76%).
Interest rates on euro deposits, meanwhile, remain firmly above 1.1% per annum. However, there is an explanation – the ECB’s interest rate policy.
It is worth underlining that the continuing trend – to date included – for interest rates on housing loans to stay below the ECB interest rates, in practice means that local banks assess the interest rate to Bulgarian citizens buying housing with a loan as lower than the interest rate fixed by the ECB – a judgement that sounds far from real.
The high liquidity in the banking sector, the upward trend in the income of the population, the budgetary policy and the labour market do not imply significant changes in loans and deposits for citizens by the end of the year.
In the case of bank financing to businesses, the average cost feels more significant monthly variations – between 4.2% and 6% depending on the size and currency of the loans.
In corporate lending, unlike private lending, more serious changes in interest rates are possible in the second half of the year. This trend depends entirely on banks’ judgement vis-à-vis an increase in business lending rates due to a deterioration in the economic situation of the main domestic partners or other factors related to the unstable situation in other parts of the world.
Interest rates on loans and deposits in Bulgaria continue to be affected by a number of internal and external factors. How financial institutions and investment strategies respond to changes in the economic environment is important. Consumers and investors need to monitor interest rate dynamics to make informed financial decisions.
And if you need any questions or advice, you can contact us at TPA Bulgaria:
TPA Bulgaria:
+359 2 981 66 45/46/47
office@tpa-group.bg
ul. G.S. 128, floor 2
1000 Sofia