YEREVAN , March 18. \/ARKA\/. The head of the Armenian Central Bank Martin Galstyan explained why banks do not lower lending rates in response to the reductions of the refinancing rate.<\/p>\n\n\n\n
On March 18, the Central Bank Board left the refinancing rate unchanged at 6.75%. This was the first time since June 2023 that the refinancing rate has remained unchanged. From June 2023 to February 2025, the refinancing rate was reduced from 10.75% to 6.75%.<\/p>\n\n\n\n
“Interest rates on loans depend on supply and demand. If we see that some bank product has a huge demand due to other reasons, particularly, government policy in the mortgage market, it does not allow us to adjust the rates in terms of reduction,” Galstyan said.<\/p>\n\n\n\n
According to him, the internal structure of the banks’ loan portfolio also affects the interest rates on loans – the share of consumer loans, the interest on which is higher, is growing. Since these loans are granted in Armenian drams, the weighted average interest rate is rising.<\/p>\n\n\n\n
“If the demand for loans drops, we may see a decrease in interest rates on loans,” Galstyan said.<\/p>\n\n\n\n
The loan portfolio of Armenia-based banks increased by AMD 1.2 billion or 24% to AMD 6.4 billion in 2024, including 1.4 trillion of consumer loans (33% growth for the year).<\/p>\n\n\n\n
Mortgage credits account for almost the same amount, 32.9% growth over the year. The construction sector accounted for 10.4% (660.5 billion drams, 32.7% growth).<\/p>\n\n\n\n
During 2024, interest rates on both AMD and foreign currency loans decreased. Rates on AMD loans from 1 to 5 years decreased by 0.7 p.p., the average interest rate at the end of the year amounted to 16.7%. Rates on loans in foreign currency decreased by 1.5 p.p., to 9.8%. -0-<\/p>\n","protected":false},"excerpt":{"rendered":"
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