In Bulgaria, 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 Bulgarian National Bank (BNB) data.

Interest rates have been decreasing for about a year now but on loans they have been decreasing at a lower ate, 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 per cent for leva and 7.93 per cent for euro, respectively.

The monthly reduction in the rates of term household deposits is sharper, to 5.92 per cent for leva and 4.9 per cent for euro. On an year-on-year basis, the decrease is 35.14 per cent and 29.8 per cent, respectively. This compares with a respective 26 per cent and 23 per cent 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 per cent last June, lev-denominated consumer loans have shed nearly two percentage points, which makes an annual reduction of 12.3 per cent, almost three times lower than the pace at which local-currency household deposits are falling.