Bank of Greece: Rapid rise in interest rates on loans, zero interest on deposits

Almost “frozen”, at 0.05 %, remains the rate on new deposits in October when the rate on new loans rose to 4.86% from 4.60% a month earlier according to Bank of Greece data for October released on Friday. The BoE data show a further widening of the gap between deposit rates and lending rates.

The variable mortgage rate has almost doubled since the start of the year (from 2.36% to 4%)

1. Interest rates on new deposits and loans in euros

New Deposits
The weighted average interest rate on all new deposits was almost unchanged at 0.05%.

In particular, the average overnight deposit rates from households and businesses remained unchanged at 0.03% and 0.01% respectively. The average interest rate on deposits with an agreed term of up to 1 year from households increased to 0.20% from 0.14% in the previous month.

New Loans
The weighted average interest rate of all new loans to households and businesses increased by 26 basis points and stood at 4.86%.

In particular, the average interest rate on consumer loans without a fixed term (category that includes loans through credit cards, open loans and overdrafts from current accounts) increased by 33 basis points and stood at 14.44%.

The average interest rate on consumer loans with a fixed term and variable interest rate increased by 41 basis points and stood at 11.37%. The average interest rate on variable rate mortgages increased by 50 basis points to 4.00%.

The average interest rate on non-term business loans rose 42 basis points to 4.79%. The corresponding interest rate on professional loans increased by 21 basis points and stood at 6.83%.

The average interest rate on new fixed-term and variable-rate business loans increased by 20 basis points in October 2022 to 4.17%. The average interest rate on regular maturity loans with a variable interest rate to small and medium enterprises (SMEs) increased by 25 basis points and stood at 4.42%.

Regarding the structure of interest rates in terms of the amount of the loan, it is noted that the average interest rate for loans up to 250,000 euros increased by 45 basis points to 5.76%, for loans from 250,001 to 1 million euros it increased by 46 basis points and stood at 4.64% and for loans over 1 million euros it increased by 10 basis points to 4.03%.

2. Interest rates on existing deposit and loan balances in euros

Existing Deposits
The weighted average rate of total outstanding deposits (including overnight deposits) remained unchanged at 0.04%.

In particular, the average interest rate on the existing balances of deposits with an agreed duration of up to 2 years from households remained almost unchanged at 0.11%, while the corresponding interest rate on deposits from businesses increased marginally by 3 basis points and stood at 0.19%.

Existing Loans
The weighted average interest rate on existing loans increased by 32 basis points to 4.27%.

In particular, the average interest rate on existing mortgage loan balances with a duration of more than 5 years increased by 29 basis points and stood at 3.02%. The corresponding interest rate on consumer and other loans to individuals and private non-profit institutions increased by 16 basis points and stood at 6.80%.

The average interest rate on business loans with a term of more than 5 years increased by 33 basis points to 3.70%. The corresponding interest rate on professional loans increased by 35 basis points and stood at 5.07%.

Table 1: Average interest rates on new deposits and loans in euros (% per annum)

Table 2: Average interest rates on the existing balances of deposits and loans in euros (% per annum)

Banks have to take over their responsibility said Prime Minister Kyriakos Mitsotakis during his meeting with the President of the Republic Katerina Sakellaropoulou.

It is recalled that the government has requested, among other things, from the banks: support for vulnerable borrowers, an increase in the approval of extrajudicial mechanism applications, a reduction in interest rates, a brake on the cost of commissions for simple banking transactions.

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