By Leonidas Stergiou
The persistent inflationary pressures, combined with the risk due to uncertainty from the Omicron mutation and in view of the ECB decisions at the December 16 meeting, are causing upward trends in lending rates. This became more apparent in October than in September and, even more so, in June, when inflation in the Eurozone was last below 2%.
The Eurostat estimate for November sees inflation in the Eurozone at 4.9%, ie the highest levels in the last 15 years. In Greece the estimate is around 4.3%, while there are Eurozone countries with inflation forecast for November above 7%, such as Belgium (7.1%), Lithuania (9.3%), and largest euro area economy, Germany, at 6%.
According to data published in the previous days by the Bank of Greece, the average interest rate on new loans to households and businesses increased by 0.17 percentage points in October, compared to September, as it stood at 3.94%. The biggest increase was in consumer loans, where the increase in a month was 0.20 percentage points. The average interest rate on business loans fell slightly, mainly due to competition, especially large loans. However, in some categories, there is also an increase of about 0.10 percentage points in business.
The average interest rate on consumer loans without a fixed term (category that includes credit card loans, open loans and current account overdrafts) increased by 20 basis points in October and stood at 14.48%. The average interest rate on consumer loans with a specific duration and floating interest rate increased by 10 basis points to 11.39%. The average interest rate on floating rate mortgages also increased by 10 basis points to 2.43%.
The average interest rate on business loans without fixed term decreased by 12 basis points to 4.13%, while the corresponding interest rate on business loans remained unchanged at 6.49%. The average interest rate on new business loans with a specific duration and floating interest rate increased by 34 basis points in October 2021, reaching 2.85% compared to 2.51% in the previous month. The average interest rate on floating-rate loans to small and medium-sized enterprises (SMEs) fell to 3.16% from 3.24% last month.
The Financial Stability Report of the Bank of Greece predicts an acceleration of inflation in 2022. As he states, such a development may threaten the favorable conditions for growth next year, due to rising costs of energy, raw materials and transport.
The upward trend began in July and August, when the ECB observed that, despite declining Euribor interest rates and bond yields, markets were taking higher positions in inflation swaps, mainly against oil and other energy. products. This was the first indication, according to ECB economists and bank executives, that the market was “locking in” interest rates due to the risk of inflation. in October at retail and business credit rates.
Source From: Capital