Will interest rates on loans and deposits in Bulgaria rise?

Will there be a jump in interest rates on loans and deposits in Bulgaria? The reason to talk about this was the European Central Bank's announcement to raise the interest rate by 0.5 basis points.

And also - is the end of the property bubble coming and is it possible that prices will fall?

The ECB's base rate increase should cool the economy and curb inflation in the Eurozone. Analysts explain that this will also have an impact on Bulgarian businesses and consumers.

"A mortgage loan is harder to take than in 2008 because banks are more careful and people are more careful," said financier Levon Hampartsumyan.

Banks will also change their commercial policy, Khampartsumyan points out. This includes tariffs as well as terms, maximum amounts and deductibles for mortgage loans. The impact of the ECB's measure is expected precisely on property prices.

"As regards properties, there is a very direct link. The cost of the loan is higher, in practice clients will be able to buy a property with a smaller amount. This puts pressure on prices to go downward, slows construction activity hence less demand for building materials, less demand for energy, fuel, reinforcing bars, concrete," said economist Lachezar Bogdanov.

According to economist Miroslav Vladimirov, the property market is stabilising and no growth in transactions is expected. There is no outflow of customers in the housing market.

"We expect prices to move with the pace of the rate of inflation. We can hardly expect a price increase," said Dr. Miroslav Vladimirov, University of Economics - Varna.

Major commercial banks have revised their forecasts for the next European Central Bank rate hike in September by between a quarter and half basis points. Slovak central bank governor and ECB member Peter Kazimir also has such expectations.

"There will be a general interest rate increase, the ECB base interest rate by 1 point. The slower and harder and less effective these measures are, the rate hikes will come faster in Bulgaria in my view," said financial analyst Ivan Stoykov.

The change in the ECB's monetary policy will not raise deposit interest rates in the country.

"Savings accounts, current accounts, these are resources attracted from the banking system itself by the specific bank and the increase in the interest rate on such a product depends on the need for these funds of the bank itself," Stoykov said.

The next steps for central bankers in Frankfurt will depend on dealing with high inflation.