Rates can float: the Central Bank has advised banks to reduce the cost of loans

Lending rates in Russian banks in issuing loans can tied to the key rate of the Central Bank. This will mean that loans will become cheaper by lowering the rate regulator, the borrowers will pay less interest without the procedure of refinancing. A recommendation was given to the bankers in the Central Bank of the Russian Federation before the meeting of the Board of Directors of the Bank of Russia, on which the basic rate can be lowered to 7.5%.


photo: Gennady Cherkasov

The Central Bank believes that banks should abandon the fixed rates for loans. It is necessary to make a floating, changing depending on the key rate of the Central Bank. This proposal is contained in published in “Vestnik Bank of Russia” February 8 letter to the Deputy Elvira Nabiullina Vasily Pozdyshev.

“At the conclusion of new contracts on loans granted to the Bank of Russia recommends credit institutions to include in the contract under which the loan will be provided, the condition of the possibility of changes in interest rates in case of reduction of the key rate of the Bank of Russia and parameters of such changes,” the document says.

Analysts believe that in the conditions when the controller step by step reduces the basic rate, this innovation will benefit retail borrowers, as the loans cheaper. However, some market participants point to the likelihood that the rate can grow. In this case, the system may increase the percentage paid by the client to the loan. Other experts claim that the risks in getting a loan with a floating rate will not rise, as in this case it will only go on lowering rates.

In General, experts positively look at the opportunity, and note that in this sentence there is a clear signal of the regulator that it plans further cuts in the key rate.

On 9 February the first this year meeting of the Board of Directors of the Bank, where the regulator is likely to again lower the key rate on loans to make domestic borrowing cheaper. That previously insisted the head of state Vladimir Putin. Analysts believe that Friday’s rate cut from the current 7.75% to 7.5%.

official channels

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