The interest rates on Bulgaria's housing mortgages have increased for both lev and euro currencies in June, showed the latest figures by the Bulgarian National Bank (BNB). The rates on euro-denominated consumer loans have ticked up by 0.08 percentage points on a monthly basis. Only local-currency consumer loans have recorded a drop, to 12.67%. Thus, the average effective annual interest rates for home loans stood at 9.08% for levs and 8.51% for euro.

So far this year, the interest rates on Bulgarian mortgages denominated in the single currency have not manifested a clear downtrend or uptrend, bouncing up and down each month. Nevertheless, lev-denominated loans have displayed a more pronounced downward direction, falling from 10.39% in June 2009, whereas the euro-denominated mortgages bear exactly the same rate as a year earlier.

The downward movement of euro-denominated loans is being driven by the depreciating euro, according to bankers. Back in 2009, when the deposit war started to ease, they expressed desire to bring down the rates on both loans and deposits. However, they note that this hinges on the improvement of the broader economy, a development that would reduce both customers' individual risk and economic risk.

At the same time, the interest rates on Bulgarian term deposits have returned to their autumn-2008 levels before the deposit war reached its peak. The average effective annual interest rate was 6% for lev- and 5% for euro-denominated deposits.

On an annual basis, deposit rates fell twice faster than loan rates, by 26% year-on-year for levs and by 23% year-on-year for euro. The rates on local-currency housing loans shed 12%, while those on single-currency loans failed to go down. For businesses, rates dropped 28% for deposits and 8% for loans.