Interest rates on the household deposits of Bulgarian banks decreased for a second straight month in July 2009, according to central Bulgarian National Bank figures.

Some experts read this as a sign that banks have started to wean themselves off their heavy dependence individuals as a source of funding. Others said it would take a while before a steady trend can emerge.

The effective annual rate has shed 16 basis points to 7.99 per cent for local-currency household deposits and 18 points to 6.34 per cent on euro-denominated products.

Lev-denominated corporate deposits come with a lower rate of 6.36 per cent. The return companies can generate from euro-denominated deposits has inched up to 4.4 per cent.

Despite the drop, household deposit rate still outstrip year-ago levels by two per cent in the aftermath of the credit crunch which sapped liquidity and forced banks to wage a drawn-out deposit war that has lasted for more than a year now.

This is the first decrease for two successive months following the one-month fall in February.

Consumer loan interest rates have moved in the same direction, dipping to an average of 14.15 per cent in July.

On the mortgage market, rates on lev-denominated housing loans wobbled down in February and May but have picked up 78 basis points since the start of the year. Euro-denominated mortgages are climbing up steadily.

Over the past 12 months, the base rate has seen a twofold decline to 2.24 per cent from more than five per cent a year ago, but has failed to check the rate spike trend.

Source: Dnevnik.bg