ECONOMY

Banks give mixed bag of interest rates

Movement on the part of interest rates for new loans in November was mixed, with the largest hikes seen among consumer credit and business loans of up to 1 million euros, while the cost of credit eased for mortgages and larger business loans. According to figures provided by the Bank of Greece yesterday, the average interest rate on open-ended consumer loans, including credit cards, rose 12 basis points (bps) in comparison with October, reaching 14.41 percent in November. The average interest rate on business loans without a set time period rose by less than 6 bps to 6.62 percent, while the average cost of money offered to different professional groups rose 4 bps to 9.47 percent, the data showed. The cost of money on mortgages, fixed or floating, for the first year fell 5 bps to 3.67 percent. After the first 12 months, the rate applicable between the second and fifth year eased 4 bps to 3.95 percent. The high cost of money, as reflected by the interest rate on time deposits, is the basic reason that lending rates are being kept high in Greece. In some cases, the cost of credit locally is almost double that seen in other European countries. What is considered necessary for the market is the closing of the gap between deposits and lending rates, or the interest rate margin, which according to the Bank of Greece widened to 3.97 percent in October. In regard to older loans, Bank of Greece data show that the interest rates headed higher, as they did for deposits.