Taken from Diario Libre
SANTO DOMINGO.-As of the end of January 2024, the sector continued to react positively to monetary measures for economic reactivation, with lower interest rates for access to credit.
According to the most recent macroeconomic situation report from the Ministry of Economy, Planning and Development (Mepyd), entitiesregistered decreases of 2.82 and 1.38 percentage points (pp) in their active rates for consumer and mortgage loans, respectively.
Meanwhile, there was a less impactful variation in trade credits, whose rate barely fell 0.79 pp compared to May 2023, when the Central Bank began the process of reducing its Monetary Policy Rate (MPR).
This means that the percentage margin of profits for banks and other financial entities has decreased due to variations in the Monetary Policy Rate (MPR) so that productive sectors and individuals can obtain cheaper loans and thus stimulate economic growth.
On May 31, 2023, the Central Bank made the decision to change its monetary policy from a restrictive strategy (in which borrowing and buying was more expensive) to an expansionary one (in which sectors with lower borrowing costs are stimulated).
On that date, the entity lowered the monetary policy rate from 8.50 to 8.00% and has been keeping it lower until it reached 7.00% at the end of January of this year.
The precise figure for the downward trend of the weighted average active rate, measured from May 2023 to December of the same year, was 227 basis points, meaning that in seven months the reduction applied by the financial system to lower the cost that people assume to obtain a loan was a little over 2%.
The information was shared by the Association of Multiple Banks of the Dominican Republic through a press release in which it states: "With the decrease, which is in line with the reduction of the Monetary Policy Rate set by the Central Bank, credit to the private sector in national currency accelerated, going from an annual growth of 11.9% in May 2023 to 21% in November of the same year.".
The entity specified that the growth in private loans from multiple banks amounts to more than 207 billion pesos. "This demonstrates the efficient work of multiple banks as a channel for transmitting these measures," it stated in the press release.
The variation by economic destination
The report from the Ministry of Economy details the behavior of the interest rate by economic destination and the variation of loans over the last four years (from January to January during the period 2021-2024), registering decreases in the rate for consumption and mortgage, while the rate for commerce increased.
The rate for consumer loans for goods and services (the rate used to calculate financing for vehicles and other items) went from 18.68% in January 2023 to 17.76% this year.
The profit margin on mortgage loans (this includes loans for construction, remodeling and acquisition of homes) stood at 13.07% at the beginning of last year and fell to 10.71% at the end of January of this year.
Meanwhile, the active rate, which is used for financing productive sectors in commercial and development activities, used by businesses selling goods and consumer products, went from 11.35% in January 2023 to 13.52% in the same month of this year.
