Kazakhstan Loan Rates for Individuals Rose to 21.9% in August

The weighted average interest rate on loans issued by banks to individuals reached 21.9% in August, up 0.3 percentage points. This marks the second consecutive month of rising borrowing costs for Kazakhstanis, with the current level the highest since May, according to infohub.kz.

Meanwhile, business financing became slightly cheaper: the weighted average rate on corporate loans was 19.3%, down 0.3 percentage points from the previous month, according to the National Bank of Kazakhstan.

By term, the most expensive loans for individuals were those up to 1 month and from 1 to 5 years, both at 24.5%. The average rate for the latter edged down 0.3 percentage points over the month. The rate for 1-3 months remained unchanged at 19%, while for 3 months to 1 year it rose slightly by 0.3 percentage points to 22.4%.

In the corporate segment, the dynamics differed. Rates for loans up to 1 month and from 1 to 3 months remained unchanged at 20.1% and 19.8%, respectively. For 3 months to 1 year, the rate fell to 18.6% (down 0.3 percentage points). Business loans for 1 to 5 years saw the highest rate in August at 22.8% (down 0.2 percentage points over the month).

In late July, the base rate, which reflects the cost of money in the economy and whose reduction makes money and thus lending cheaper, was cut to 16.75%. In early September, it was lowered to 16.25%.

The National Bank previously noted that corporate loan rates usually adjust following the base rate, while consumer and mortgage rates react less due to the specifics of these segments.

Banks may be in no hurry to reduce the cost of loans for individuals, and instead are making them more expensive due to tighter regulatory requirements for reserving funds when lending.

Earlier, expert Aigerim Ilyassova noted that a reduction in the base rate does not automatically mean cheaper loans. Loan rates will decline gradually but will still remain relatively high. According to the financier, the National Bank keeps the base rate high to curb lending and consumer demand, thereby reducing pressure on prices.