The interest rates in retail bank deposits ended the last year (2009) with decrease. The deposit expansion in both volume and interest rates on the Bulgarian retail market seems to have come to an end. Deposit interest rates are falling since the middle of 2009 from 8.16% in the beginning of the year to 7.5% in December (both market average for BGN deposits). The interest rates for EUR deposits are respectively dropping from 6.31% to 6.16%.
On the other side the interest rates on mortgages and other loans are sending mixed signals on a month to month basis (December to November 2009). Mortgage rates in BGN are rising with 0.58% to 9.72% while the interest rates in EUR are falling to 8.72%. The bank lending rates are slightly decreased to 13.54%. Banks’ commercial lending rates (up to 1 Mio. EUR) are getting more expensive resp. to 10.93% и 9.34% for BGN and EUR. For amounts over 1 Mio EUR lending rates in EUR are increasing to 7.69% and dropping to 8.16% in BGN.
According to Postbank’s leading manager the mortgage rates in BGN are not representative because the demand for home mortgages is mainly in EUR. According to him Bulgaria is still in the beginning of the process of decreasing deposit rates. A decrease in deposit rates would also take the pressure on the lending rates, he says.
Despite the falling interest rates on retail deposits the Bulgarian are increasing their savings, according to Raiffeisenbank. The savings of Bulgarian households in November 2009 are BGN 24 Bio, this is an increase of 7% according to the BGN 22.5 Bio in January 2009. The Raiffeisenbank study shows that the Bulgarians are shifting their short term deposits (one to three months) to loner ones (12 months). Thus the volume of deposits in Raiffeisenbank hasn’t been changed in 2009 – this means that the bank didn’t manage to attract new resources. The bank says the more and more clients are using their online banking proffered for its convenience.
Accordind to UnicreditBulbankk the deposits in Bulgaria will continue to rise with an average rate of about 6.3% p.a. for the next two year. The mortgages will rise with an average of 5.3% p.a.