Interest rates remain stable due to high demand for consumer and  mortgage loans

ArmInfo. High demand for consumer and mortgage loans is keeping interest rates at the same  level. This was stated by the head of the Central Bank of Armenia, Martin Galstyan, during a press conference on February 4, while responding to a question about how  the reduction in the refinancing  rate is affecting loan interest rates.

Referring to the structure of the loan portfolio by individual  products, Galstyan noted  a significant increase in consumer and  mortgage loans  at the end of 2024, especially in December. He   mentioned that December was particularly active in terms of mortgage  lending due to it being the last month for the income tax refund  mechanism within the mortgage framework.. The head of the Central  Bank also noted that in order to have a clearer understanding of  interest rates, an analysis was conducted on over 700 companies that  had taken out loans in the past two years. At the same time, Galstyan  drew attention to the fact that the yield curve of government bonds  in the short term is closely connected with the refinancing rate.

There is no paradox in the fact that the refinancing rate does not  have a significant impact on interest rates.  In this regard, he  cited the example of the US Federal Reserve. When it lowers the key  rate, the yield on government bonds and mortgage rates go up.  <We  must understand that we do not have administrative control to  influence this situation. By imposing limits on interest rates, we  could actually do more harm to our economy. In addition, there is no  evidence of monopolization in our banking sector. We have a  competitive banking system that operates freely. Banks are obligated  to consider the risks involved involved in lending money and manage  them wisely and prudently, rather than acting out of charity,>  Galstyan said.

It should be noted that the Board of the Central Bank of the Republic  of Armenia, during its meeting on February 4, decided to reduce the  refinancing rate by 0.25 percentage points - from 7% to 6.75%. In  total, from mid-2023 to this day, the key rate has been reduced by 4  percentage points, from a historically high of 10.75% in December  2022.  According to the Statistical Committee of the Republic of  Armenia, interest rates on dram loans in Armenian banks increased to  13.41% by December 2024 from 12.7% a year earlier.