Author Topic: Interest rates slashed  (Read 4091 times)

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Offline JohnF

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Interest rates slashed
« on: November 02, 2016, 09:06:30 AM »
I bet that got your attention  :) 

This doesn't really affect those dependent on TL time deposit accounts, for now that is.  However, if you've a TL mortgage or credit card then due to pressure from the government most banks have reduced the interest you pay on loans and credit agreements.  The reductions vary between banks but it looks to be around a 10% cut.

The government deny putting pressure on the banks, but in a recent speech by the prime minister, he basically called the banks "loansharks".

What is probably more important to those who are depositors are the comments made by the deputy prime minister recently:

We have been in dialogue with lenders. Our purpose is to accelerate the interest rate cuts, mainly on deposit rates, which are higher than the rate of inflation in Turkey

Nothing like stating the obvious, eh?

My usual interest rate feed isn't working so I had a quick look at Akbanks TL time deposit account rate - 8.5%.  That seems low to me and I don't any historic rate data for them.  Garanti seem to be still offering 10.25% but Finans are now down to 9%.

They're all still (gross) above the rate of inflation but the question is, bearing in mind the deputy PM's comments and the wee fella's hatred of high interest rates, coupled with the banks reduction in income from lower lending rates, how much longer will they stay above inflation...?

JF

Offline kayakebab

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Re: Interest rates slashed
« Reply #1 on: November 02, 2016, 14:40:49 PM »
They didnt change this month for the first time in months.

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Offline JohnF

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Re: Interest rates slashed
« Reply #2 on: November 02, 2016, 17:05:56 PM »
I'm sure for many they haven't.  The point I was making is that banks make their money by taking in cash from savers on deposit, which they then lend out to borrowers.  In simple terms (for me as much as anyone else!), the difference between the interest they pay and the interest they receive is where the profit is.  If the lending rates are being forced down then to still make enough profit it could be that this will push down deposit interest rates.

Will this happen?  I haven't a clue.  But it appears that now is a good time to have some consumer debt in Turkey as it is getting cheaper to borrow money than it was before.  Saying that, interest on property loans is still running well above 10% - not sure we'll see thousands of new mortgages over the next few months!

JF

Offline Colwyn

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Re: Interest rates slashed
« Reply #3 on: November 02, 2016, 17:20:06 PM »
I was listening to a financial whizz being interviewed on the radio a couple of days ago. Quite casually he dropped this jaw-dropper into the conversation: At present there is a world-wide glut of saving. He mentioned this to explain why the Bank of England wasn't under any great pressure to increase interest rates. He didn't explain the economics behind this "glut" but as a first guess I suppose that, since 2008, there has been under-investment in world economies (compared pre-2008) and the "spare" money goes into savings. First guess; I am open to other offers.

Offline JohnF

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Re: Interest rates slashed
« Reply #4 on: November 02, 2016, 17:23:02 PM »
I was listening to a financial whizz being interviewed on the radio a couple of days ago.

Was it Ben Bernanke?

JF

Offline Colwyn

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Re: Interest rates slashed
« Reply #5 on: November 02, 2016, 17:35:23 PM »
I suspect it might have been. I see young Ben has a long track history of singing that song.

Offline JohnF

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Re: Interest rates slashed
« Reply #6 on: November 02, 2016, 17:38:44 PM »
Aye, he does.  Ex chairman of the Fed and now happily spouting his thoughts as a member of the Brookings Institute in DC.

Fairly sure he coined the expression and seems to be the only one who regularly uses it. 

JF

Offline Colwyn

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Re: Interest rates slashed
« Reply #7 on: November 03, 2016, 09:25:28 AM »

Nothing Like a Threat of Treason to Make Turkish Banks Cut Rates
This is today's attention-grabbing title of an article in Bloomberg. The analysis is not a hundred miles away from from Ben's - there is no great demand in Turkey to borrow money (at least from people capable of repaying it). “We had weak borrowing demand from companies despite a strong appetite to lend by the banks,” said Huseyin Aydin, head of the Turkish Banks Association. The Turkish economy continues to perform sluggishly.

http://www.bloomberg.com/news/articles/2016-11-03/erdogan-leans-on-turkey-s-banks-and-slowly-rates-come-down

Offline JohnF

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Re: Interest rates slashed
« Reply #8 on: November 03, 2016, 20:03:03 PM »
Talking of the Brooking Institute, which we were briefly, another interesting character from there has just popped up in an HDN article - Kemal Derviş, the man who when Minister for Economic Affairs way back in the early 2000's sorted out the Turkish economy and basically created the pathway the AKP followed when they got into power in 2002.

Seriously clever geezer methinks.  Anyway, he's got a book out so looks like he's doing the tour...    :)

JF




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