Activity begins in the credit market: Interest rates have started to fall

With the Central Bank's recent reduction of the policy rate, activity has begun in the credit market. Interest rates on commercial loans denominated in Turkish Lira with maturities of 24 months or more, in particular, have fallen to as low as 36 percent. 

With this decline, commercial loan interest rates have seen levels below 40 percent for the first time in 16 months.

CREDIT USAGE HAS GRADUALLY DECREASED 

It is known that prior to June 2023, commercial loan interest rates were below 20 percent, while the policy rate stood at 8.5 percent. However, the interest rate hikes that began from that date onwards gradually reduced the use of TL-denominated commercial loans.

According to a report by Ekonomim, the banking sector has begun applying interest rates between 36 and 38 percent on long-term loans following the Central Bank's rate cut. 

INTEREST RATES WILL DECLINE FURTHER

Banking sources point out that if the Central Bank lowers the policy rate further in the coming period, commercial loan interest rates could decline even more.

Sources state that banks are taking the risk of extending loans at lower interest rates in the long term, with the expectation that the rate-cutting process will continue and progress will be made in the fight against inflation.

It is anticipated that if a new rate cut comes onto the agenda at the Central Bank's Monetary Policy Committee meeting to be held next week, lower rates could be seen in commercial loans.