The cost of credit will be less beneficial with the decline in inflation

The BCRA Monthly Monthly Report for September reveals: “Loans in pesos to the private sector recorded an increase of almost $4 billion, consistent with a monthly growth of 7.7% at constant prices and without seasonality.” So, they’ve racked up 6 consecutive months of gains and are actually almost 60% above their year-to-date lows.”

And he said: “The growth in loans extended to all lines, as in the previous months. To find time with these features, we have to go back to the end of 2017. In particular, in September the performance of personal loans and mortgages stood out, growing at double-digit monthly rates. In terms of GDP, credit to the private sector reached 5.9%, accumulating an increase of 1.5 percentage points in the last 5 months. “

A key factor in this trend, along with the return of the real income of the population (both for the average wage earner and for retirees and pensioners who earn more than the minimum). fall in nominal and real interest rates at a faster rate than deflation, both compared to December 2023 and September of that year.

However, a change in trend is beginning to be seen in interest rates in real terms that still do not seem to be correctly perceived by economic agents and various analysts, as they compare the annual nominal rates and the rate of inflation in the last twelve months.

In that case, the exercise of comparing the series of real interest rates for each September from 2018 shows that there are very high values ​​for very short-term financing of companies (temporary advances and discount documents, to a large extent), and also for personal loans and through credit cards, they entered negative limits and increased to a real over 50% negative (under inflation).

This situation is beginning to worry many economists, as they believe that it could lead to overheating in the demand for loans to buy consumer goods in all lines – perishable as well as durable – with the resulting negative impact leading to the breakdown of the system. deflationary path.

Although interest rates have been separated from the monetary policy rate, after issuing a zero decision for finance to the Treasury Department, first, and then transferring responsibilities with wages from the Central Bank to the Central Administration, they ‘ maintain a reference relationship with the level of issuance of short-term public securities by the Ministry of Finance, such as Capital Letters (Lecap).

This connection, together with the natural game of supply and demand, where the supply increased as a result of travel crowd out a collect in (that is, the absorption of liquidity by the public sector, moving from the private sector, to the distribution of these resources), and the demand for stimulus represented by the sharp decline in the nominal annual rates, allowing a significant improvement in the dividend ratio. / monthly income of interested parties. Especially in the segment of long-term lines for the purchase of durable goods with collateral, this led to an increase in rates in all market segments for the second month in a row in September.

The BCRA Report pointed out: “Growth in the month was largely driven by commercial loans, which together showed a real increase of 7.3% excluding seasonality (se) and explained about half of the month’s expansion.

Within commercial loans, credits implemented through documents stood out, growing by 8.8% monthly, seasonally, in real terms and 13.1% above the level recorded a year ago back Both single-signature loans and those discounted by SMEs showed a favorable evolution during the month.

For their part, advances recorded a monthly increase of 4.3% in real terms in September (17.3% yoy). Likewise, consumer credit continued to expand in September and showed an improvement of 7.6% month on month at constant prices (12% yoy).

And the entity’s analysts said: “In terms of personal loans, they increased by 13.8% in real terms compared to August, leading to the most dynamic line of the month, with an interannual growth of 38.1% (see Chart 3.2.3). For its part, credit card financing accelerated its expansion, showing a monthly increase of 4.1% at constant prices. “

Collateralized loans also showed good performance, led by mortgage loans, which showed a monthly increase of 14.2% in real terms, the largest expansion in the past 22 years.

However, this path could be moderated in the coming months, when a clear turning point in real interest rates can be seen considering the pace of September’s expected twelve-month inflation. in front.

The most notable issues were loans to small and medium businesses, through advances in bank checking accounts, personal loans and through the use of credit cards, which went from extremely negative rates of 48% to 54% each year to a very positive rate of 1.75%, 12.1% and 20.9%, respectively.

In the rest of the regions, although the values ​​remained well below the inflation rate one year after the last known data, they also showed a notable cut, from more than 50% in real terms to less than a fifth of that ratio. they had in the same month of the previous year (7.5% for pledges, 8.6% for discount documents, and 11.5% for mortgages).

In any case, to the extent that the average recovery of the population’s income is maintained, it is considered in the market that the use of credit for the purchase of housing will continue to be beneficial .

This is because of the upward movement in real estate pricesand to the notable reduction in nominal interest rates, which, although becoming positive in real terms, have significantly improved the tax/income ratio for all terms .