Several Bulgarian banks have raised, or plan to raise, interest rates on outstanding and new loans, Dnevnik daily reported on March 24.
A survey of lending criteria carried out by the daily showed mortgage and consumer loans were the ones most affected, with interest rates going up by 0.25 to 0.5 percentage points.
Former state savings bank DSK, now owned by Hungary's OTP Bank, plans to raise the interest charged on mortgage loans by 0.25 percentage points on April 2. The bank is Bulgaria's second-largest by assets tops the mortgage lending segment with 27.5 per cent market share, according to Bulgarian National Bank (BNB) data, as quoted by Dnevnik.
National Bank of Greece-owned United Bulgarian Bank, which ranks second to DSK on the mortgage segment and third overall, has raised its interest rates on both mortgage and consumer loans by 0.5 percentage points on March 1.
Eurobank EFG Bulgaria, the country's fifth-largest lender, joined the club on March 24, raising interest on mortgages by 0.25 percentage points, both for outstanding and new loans.
Piraeus Bank's Bulgarian arm is considering a similar move, although it declined to say when it would do so, Dnevnik said.
Among the banks that do not plan to raise interest rates are EIBank, owned by Belgian group KBC, and Unionbank, where Hungary's MKB bank is the majority shareholder, as well as locally-owned First Investment Bank and Investbank.
The recent spate of interest rate hikes reverses the previous trend, with Bulgarian lenders aggressively wooing consumers with low interest rates as late as autumn 2007, when global markets were already reeling from the effects of the global financial crisis and after BNB introduced higher reserves requirement in a bid to rein in credit growth.
Despite BNB's attempts to slow down lending by cutting down the resources available to banks, credit growth in 2007 was 62.5 per cent, a trend that slowed down slightly in January 2008, when the year-on-year growth rate slowed down to 61.8 per cent, according to central bank data.
