Inflation in Turkey fell below 30 percent again, turning attention to interest rate cuts in individual financing. Before the Central Bank of the Republic of Turkey (CBRT) meeting on October 22, different trends draw attention in the loan and deposit markets.
While the decrease in banks' funding costs caused deposit interest rates to decline, its impact on loan interest rates was limited. According to the analysis of Hesap.com, a technology-focused banking products marketplace, while loan volumes grew below inflation in September, consumers' tendency towards installment payments continued. Although total sales in the housing market decreased, the share of credit purchases increased.
According to TÜİK data, consumer prices increased by 1.84 percent monthly and 29.73 percent annually in September. The fact that inflation was below market expectations brought expectations regarding the course of interest rates back to the agenda. During the period when the CBRT kept the policy rate constant at 37 percent, while banks' funding costs relaxed, the course of loan and deposit interest rates in the coming period becomes important.
BORROWING DECREASED IN REAL TERMS
According to BRSA data, consumer loans have increased by 18.7 percent since the beginning of the year and reached 3.49 trillion TL. In the same period, consumer loans grew by 18.1 percent and personal credit card volume grew by 24 percent. While consumer loans increased by 0.9 percent and credit card balance by 0.4 percent in September, the monthly inflation rate of 1.84 percent indicated that the household debt stock decreased by approximately 1 percent in real terms. The fact that consumer loan interest rates were at 62.73 percent showed that borrowing costs remained high.
The seasonal increase in card spending seen in September with the opening of schools in previous years did not occur this year. According to CBRT data, the average weekly card spending in September was 668.7 billion TL, 0.2 percent below that in August. In the previous two years, there was an increase of 2.5 percent and 4.1 percent, respectively, in the same period. In addition, card expenditures increased by 36.4 percent on an annual basis and grew by approximately 5 percent in real terms.
INSTALLMENT DEBT IS INCREASING
Installment credit card balance has increased by 30.1 percent since the beginning of the year and reached 1.34 trillion TL. Its share in the total credit card balance increased from 36.9 percent to 38.7 percent. While the installment balance increased by 3.2 percent in September, the non-installment balance decreased by 1.3 percent. Data shows that consumers' tendency to spread their payments over longer periods continues.
According to TÜİK data, while housing sales decreased by 6.8 percent in the first eight months of the year, credit sales increased by 27.6 percent. The share of credit sales in total increased from 14.5 percent to 19.9 percent. Housing loan volume has also grown by 23.5 percent since the beginning of the year, reaching 838.8 billion TL. Housing loans, which were the fastest growing item among consumer loans with 1.4 percent in September, maintained the lowest delinquency rate with 0.21 percent.
"COST AND MATURITY COMPARISON IS GAINING IMPORTANCE"
Özgür Göçen, Deputy General Manager of Account.com, evaluated the developments in individual finance as follows: "With the decline in inflation, the course of interest rates becomes important for both borrowers and savers. September data shows that installment borrowing and housing purchases on credit increased despite the real contraction in loan volumes. On the savings side, TL deposits are strengthening while interest rates are declining. In this period, it is important for consumers to carefully evaluate loan costs, payment plans and maturity options. As Nakit.com, we offer loan and deposit offers of different banks." “By offering comparison opportunities on a single platform, we help our users make their financial decisions under the most advantageous conditions.”
