Asuncion: The average interest rate on loans continues to rise due to the impact of the BCP’s monetary policy rate, reaching 16.7% in March this year. The areas where interest rates were raised were commercial loans, housing, consumer goods and credit cards.
In March this year, the weighted average of active interest rates in local currency showed an increase compared to the average of the previous month and also a higher level compared to the average of March 2022.
According to the report released by the Central Bank of Paraguay BCP, the average active interest rate (on loans) was 16.7% in March this year, higher than the 16.6% it reached in February 2023 and higher than the 14% registered in March 2022. This increase in the average interest rate charged by banks for arranging public loans coincides with the increase in the Central Bank of Paraguay’s monetary policy interest rate, which rose from 0.75% in August 2021 to the current 8.50%.
Despite the deceleration in inflation (5.3% yoy to April), the BCP has kept its reference rate at the same level for eight months.
At a portfolio-by-portfolio basis, the respective weighted average lending rates for commercial, residential, retail, and credit card loans increased relative to the monthly and annual averages.
According to the report, commercial loans rose to 14% in March this year from an average of 11.5% in March last year. Finally, credit card financing also saw an increase from 13.57% (March 2022) to 17.97% (March 2023).
In addition, interest rates on housing and consumer loans were also increased with the same effect. The average bank interest rate for home loans in March this year was 11% and for consumer loans was 22%. However, the effective interest rate is below the maximum or cap rate set by the BCP.
It is worth noting that the limit for loan interest rates in Guaranies this month May is up to 30.37%, which is slightly lower than the previous month (April) of 30.38%. In addition, the interest rate cap for financing with credit cards has been lowered, currently at 18%.
Although there have been sustained hikes in the usurious interest rate limit in recent months, they still have not reached the level of a year ago (30.89%).
Weekly / ABC Color
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2023-05-15 04:05:55
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