Banks receive more interest on credit but pay less for deposits

You banks increased the granting of credit to individuals and companies in September, even with rising financing costs. In total, 3,821 million euros were granted in new loans, 670 million euros more than in the previous month.To individual customers, banks granted a total of 2,006 million euros of new credit in September, which represents a increase of 136 million euros compared to August. The largest part – 1,338 million – was mortgage loans, 121 million euros more compared to the previous month (1,217 million euros), according to data revealed by the Bank of Portugal. increase new loans for home purchase after three consecutive months of decline. Since June, the amount of new mortgage loans has been decreasing, having now grown in September, even in a context of worsening Euribor rates and rising installments. On the other hand, the amount of new consumer loans decreased by 482 million euros, in August, to 467 million euros, in September, while loans for other purposes increased from 171 to 201 million euros. Regarding companies, the amount of new loans granted by banks was 1,815 million euros, plus 534 million euros than in the previous month. An analysis by amount shows that 966 million euros were borrowed in loans up to 1 million euros (822 million in August) and 849 million euros in loans above 1 million euros (460 million in August).

House interest hits highest level since 2015

In new housing loans, the average interest rate rose to 2.23%a value above the one observed in August (2.01%) and which represents a maximum since October 2015. An evolution that, according to the Bank of Portugal, “is in line with the rise in the average Euribor rates in August”. In the case of outstanding housing loans at the end of September, the most common index is the 12-month Euribor. Looking at new consumer loans, the average interest rate was 7.85%slightly below the 7.94% of the previous month. In the case of loans to companies, interest rates increased again, settling at 3.04% (2.73% in August). Since February 2017, interest rates have not exceeded the 3% barrier. The average interest rate rose both on loans up to 1 million euros (from 2.96% to 3.30%) and on loans over 1 million euros (from 2.32% to 2.74%). : Housing credit: Effort rate above 36% will force renegotiation

Remuneration of deposits falls again

With the rise in benchmark interest rates by the European Central Bank (ECB), one would expect a repercussion in both loans and deposits. However, the rises have been limited to credits, as the banks continue without increasing the remuneration on deposits. In fact, in these savings products, interest not only did not rise, but also fell, in September, for the second consecutive month. Data from the Bank of Portugal show that, in September, the amount of new term deposits from individuals was 3,901 million euros, of which 3,445 were invested in term deposits of up to one year, remunerated at an average interest rate of 0.05%. This rate represents a decrease compared to the average interest rate of 0.07% in August, which had already fallen in relation to July (0.09%). New corporate term deposits totaled 1,112 million euros, of which 1,066 were invested in term deposits of up to one year, remunerated at an average interest rate of 0.25%. Read also: 5 safe investments to invest your money