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Average term deposit rate goes through the roof

Wednesday, Jan 07, 2009

Annual interest rates on term deposits in Bulgaria hit a new high in November of an average of 7.09% for new local-currency household products, up 2.51 percentage points from the same period of last year, under central bank data.

Rates jumped beyond the 7% mark five years ago but only on two-year deposits.

New corporate deposits came with a rate of 6.25% on average in November 2008 rising by 2.18 points on the year.

Rates on existing household deposits gained 1 point to 5.60%, and 1.80 points to 5.66% on existing corporate deposits.

Banks pelted savers with deposit promotions in the last quarter of 2008 seeking fresh cash to make loans after the global crisis made it hard to reach international markets.

As the race tightened, lenders launched double-digit annual deposit rates and chopped terms prompting warnings that the limit has been reached on both loans and deposits.

Still, loan rates are unlikely to fall as resources cost a lot on the domestic market and are hard to get abroad, according to experts.

Source: Dnevnik a.m.