2024-02-12 08:47:59
- There may be an increase at the end of 2024 and the beginning of the next
- Changes are made twice a year
Interest rates on deposits will increase at the end of 2024, and those on loans after 6 months – i.e. from the middle of 2025. The forecast is of bankers and financiers.
The expectations are that the yield on deposits will rise by 0.5-0.7%, and mortgages will rise in price by 0.1-0.4 percent. Thus, money saved in a bank will bring an average income of 1%, and the increase in the cost of housing loans will remain below 3%.
Deposits and loans turn out to be “linked” not only by economic logic, but also according to the mechanisms by which banks calculate interest on them. More than the big financial institutions consider the increase in the cost of loans according to the yield of deposits.
Interest rates on loans most often have a fixed percentage and an allowance, which is determined for everyone depending on their risk profile, according to research by “Active Users”.
This means that a change in the yield of deposits can be a signal of an increase in the price of a withdrawn loan. And the margins – that is, the difference between the two interest rates – is within 1.5-2%.
More and more banks have preferred to include a premium in the methodology, which is individual and
measures the level the risk
which is assumed with the granting of a loan. For this reason, the tightening of credit criteria becomes more and more personal depending on age, profession, marital status and a bunch of other characteristics. The ability to pay off the obligation for the entire term of the loan, its purpose, as well as the security for it must be evaluated, taking into account even depreciation or a possible collapse in prices. This allowance starts from a certain minimum amount and increases the riskier the client is.
The basis for calculating the variable interest is most often the so-called reference interest rate. Since it is set by the central bank, some treasuries apply it directly. Many rely on the EURІVOR safety index, others use a combination of the index, and one large bank uses its own methodology.
The conditions are public and appear in every credit agreement. The price change is most often done with an annex signed by both parties. The usual time is the beginning or middle of the year.
The expectations for an increase in interest rates, which the BNB has been officially warning about for at least two years, have not been realized so far.
The mortgage boom continues with over 400 million BGN new loans taken out by households in the last month of last year alone, there is a slight cooling only in lending to businesses. Savings are also growing, increasing by a record BGN 2.8 billion in December 2023.
The forecast for an upward movement of interest rates
can again to move away with a year or two
Credit consultant Tihomir Toshev points out a similar scenario. According to him, the fact that most major banks have extended their promotions until the end of March means that changes are unlikely for the first half of the year. According to him, the average interest rate on mortgage loans will remain 2.2-2.8%. In the second half of the year, it may rise, but it is unlikely to be by more than 0.3%, i.e. the average will remain below 3 percent.
According to the economist Lachezar Bogdanov, there will be no significant change in both the yield of deposits and the increase in the cost of loans, if the BNB through various instruments
don’t put the banks in conditions of competition for deposits
However, for many people, even a slight increase in interest rates can cause difficulties. The advice of the bankers in such a case is to renegotiate the terms or the monthly installments. And they point out that the probability of changes is greatest for banks that use one index.
It is important to know, however, that the increase in the basic interest rate and the change in the indices do not automatically lead to an increase in the cost of loans or a higher yield on deposits. Each bank decides for itself whether to make changes and to what levels.
130 Bulgarians have invested an average of BGN 2.4 million per deposit in just 90 days
In one year, 282 new deposits with over BGN 1 million in them were opened in the banks. This is shown by the statistics of the BNB for December 2023. Thus, the number of official millionaires with a deposit is now 1,540. For the first time, the amount they keep in banks exceeds BGN 4 billion. On average, more than BGN 2.6 million fall per person.
In fact, almost half of them appeared at the end of last year. In December, for the last quarter of 2023, 130 accounts with over 1 million BGN were opened, and 316 million came to the total amount from them alone. This means that each of them invested an average of 2.4 million.
The data for the last month of 2023 also show that the total amount of savings is now BGN 79.9 billion. It is also clear from the statistics of the central bank that fewer accounts are being opened, but with more money in them . Thus, deposits for the year increased by only 0.2%, but the amount of money in them increased by 11%.
The trend continues for accounts with BGN 50,000 to BGN 100,000 to have the largest share in the total amount of deposits. There is no significant change in the reduction of small deposits up to BGN 5,000, which means that they may be closed, but they may also have passed into the group over BGN 10,000.
There is a similar trend in loans – the number of loaned funds for households decreased by 0.5% compared to a year ago to 2.816 million. However, the total amount of money in them increased by 15.9% to 38.4 BGN billion
For the last quarter of last year, the number of loans to households decreased by 1.3%, but their size increased by 4%. Most often, loans in the amount of BGN 100-250 thousand are taken out, and their most likely purpose is the purchase of property.
However, low interest rates lead to a real boom in large loans. 622 people withdrew between BGN 500,000 and BGN 1 million last year alone. On an annual basis, the increase is over 54%, and the amount withdrawn from them is over BGN 407 million. If the holidays, during which the banks are closed, are removed, this means that every day three people took out a loan of such an amount.
The “credit millionaires” who borrowed over 1 million from a bank are 216 people. And here there is an impressive increase – last year their number increased by 67 people, which makes 45%. They withdrew BGN 81.6 million, that is, over BGN 1.2 million on average per person. (24 cups)