Interest rate cut stimulates demand for bank loans

Chisinau, 21 March /MOLDPRES/- Demand for bank credits increased strongly and reached 1.8 billion lei in February, by about 700 million lei over the same period of the previous year. The demand for loans is stimulated by the interest rate cut on national currency funding, which went down to 8.30 percent annually in February, compared with 9.47 percent in the second month of last year, according to data by the National Bank of Moldova (BNM).

The period with relatively low interest rates will continue, given the liquidity surplus in the banking system, the financial experts believe. The experts noted that the volume of new loans granted for the purchase / construction of the building, or for consumption, as well as the lending rate of legal entities is expanding.

The interest on bank loans in MDL followed a downward trend after January 2009, when the rate rose to 23.25 percent per total system, and the loans taken by private people reached an even higher level of 24.19 percent. There was a long period of downsizing of bank financing, which was offered in November 2014 at a rate of 9.81 percent annually, but as a result of the banking crisis it returned to growth and peaked in recent years of 16.09 percent in January 2016.

According to BNM data, banks granted in February 2019 credits in national currency worth 1 billion 795 million lei, about 350 million more than in the first month of 2018. Over 89 percent of credits were provided for more than 12 months at an interest rate of 8.22 percent per year.

Private people took loans in MDL at an average rate of 7.65 percent, after three months in a row, at 7.44 percent annually, and the average interest on loans for real estate was 6.22 per cent. Banking statistics show that this February the people took loans for real estate worth 235.6 million lei, compared with 74.06 million in the same period of the previous year.

The weighted average interest rate on new loans in foreign currency during the reference period was 4.46 percent. Due to cheaper loans in MDL, businesses and people took in February 2019 loans in foreign currency in the amount equivalent to 712 million lei, two and a half less than in national currency.