Turkey’s state lenders will follow the central bank’s shock interest-rate cut of 200 basis points and offer cheaper commercial loans, looking past market turmoil to deliver a boost for the economy.
The announcement underscores the resolve by policy makers to keep credit flowing through Turkey’s $765 billion economy even after the lira sank to its weakest levels against the dollar and as risks mount in the financial system. Turkey’s currency has lost 24% against the greenback this year.
TC Ziraat Bankasi AS, Turkiye Vakiflar Bankasi and Turkiye Halk Bankasi AS said in the statement that they would also start offering mortgages at a monthly 1.29% for loans below 1 million liras ($102,478) and 1.34% for those over 1 million liras. Annual inflation was running at nearly 20% as of end-September.
The government has followed the same route to ease the impact of the coronavirus pandemic. The central bank cut its benchmark rate by 300 basis points to 16% over its last two meetings — including last week’s bigger-than-expected move — as Erdogan urged lower borrowing costs to boost economic growth.
The volume of commercial loans is up 9% this year, while consumer loans grew 12%, according to official data.