Interest rates flipped, deposits hit 20-year high

SAFAKNA TURKEY – The interest rate policy of the government and signed resolutions revealed an unusual picture in the banking system. The average interest rate on deposits in lira with a maturity of up to 3 months exceeded the average of all rates on loans.

According to the Central Bank (CBRT), as of March 10, the average rate on deposits with a maturity of up to 3 months rose to 27.83 percent, while interest rates on loans remained below this rate.

As of March 10, average interest rates were 26.48% for consumer loans, 24.72% for auto loans, 16.40% for home loans, and 16.17% for commercial loans.

The last time in April 2020, average interest rates on consumer loans were below the deposit rate. 35 months later, this situation repeated itself.


While the CBR cut the discount rate by 8.5 percent, banks’ deposit rates continue to rise.

The average interest rate on deposits with a term of up to 3 months reached 27.83 percent as of March 10, reaching a peak of 19 years. The levels of deposit rates were last observed in December 2003.

As of March 10, 2023, the average interest rate on deposits is 16.68 percent for up to 1 month, 14.93 percent for up to 6 months, 12.26 percent for up to 1 year and 11.24 percent for up to 1 year old. with a maturity of 1 year or more. .

After the upper limit of foreign currency conversion into deposit Turkish Lira “interest rate + 3 points” was removed at the end of January 2023, average rates on deposits with a maturity of up to 3 months increased by about 3 points.

Rules to reduce foreign currency deposits and increase the share of deposits in TL to 70 percent are forcing banks to raise deposit rates. However, due to the implicit limits introduced, lending rates are moving in the opposite direction.

On the other hand, although deposit rates have risen, they are still well below the official inflation rate of 55.18 percent, and there are losses in real terms. This leads those who have money to the stock market, real estate, gold and consumption.


After commercial loans, the CBRT also pegged consumer loans to the policy rate last week.

As of March 11, banks are required to hold securities if they issue consumer loans in the amount of more than 70,000 Turkish liras with an interest rate of more than 18.56 percent.

Low-interest loans are aimed at supporting strong economic growth ahead of the elections, but the fact that inflation is at its highest in 24 years and the current account deficit is breaking records paints a worrying picture for the government.

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