Housing loans in Bulgaria are expected to remain inexpensive in the coming months, according to a recent survey conducted by the Ministry of Finance. Financial intermediaries, including commercial banks, investment firms, management companies, and pension funds, anticipate that interest rates on loans will stay at their current low levels.

The primary reasons for this stability include an ample supply of money within banks, significant competition among them, and persistently low deposit rates. In the second quarter of the year, new housing loans continued to be offered at historically low rates, with a slight decrease in interest rates compared to the first quarter. However, there was a modest increase in interest rates for new corporate loans denominated in leva and euros, while rates for US dollar loans saw a slight decline. Consumer loans in leva experienced a more noticeable rise in interest rates.

Deposit interest rates are also expected to remain steady, with the majority of financial intermediaries predicting no significant changes. The slow transmission of Eurozone interest rates to domestic loan and deposit rates, due to local market conditions, is a contributing factor. The ample liquidity in banks and ongoing competition, coupled with a steady increase in deposits, are key elements maintaining the low deposit rates.

Inflation is projected to rise slightly in the near future, with survey responses reflecting mixed expectations. While 25% of respondents foresee inflation remaining stable, 44% anticipate a slight increase, and 31% expect a slight decrease. Previous forecasts of a modest rise in inflation for the second quarter materialized, with inflation dropping to 2.5% by April 2024, its lowest in three years. However, inflation increased slightly to 2.7% in May and 2.8% in June, primarily due to higher energy prices.

In terms of employment, financial intermediaries do not foresee significant changes. A majority of 56% expect employment levels to remain stable, while 31% predict growth. According to recent NSI business surveys, hiring expectations are improving in the construction, industry, and services sectors, though expectations for employment in retail trade are slightly declining.