Chilean banks charge inexplicably high rates for consumer loans while offering cheap financing for companies, central bank President Jose De Gregorio told a gathering of bankers today, according to a copy of his speech published on the central bank website.
“I don’t have a convincing explanation, because it’s hard to explain average rates on consumer credits in the region of 30 percent or more,” De Gregorio told the Chilean association of banks and financial institutions in Zapallar, Chile.
Chilean companies can borrow at lower rates than counterparts in most emerging markets, at costs similar to those in developed economies, De Gregorio said. Given that, it is hard to understand why banks charge so much for lending to consumers, he said.
The average interest rate Chilean banks charged for a consumer loan due between six months and one year was 35.85 percent in March, according to central bank data. The average rate on a similar loan to a company was 10.05 percent.
De Gregorio welcomed recent legislation permitting covered bonds in Chile. Covered bonds should start to replace current forms of mortgage financing, he said.