The low base interest rate is a way for central banks to tell the real sector: consume, invest, take loans, spend more. But as the real sector is cautious and acts as “once bitten, twice shy”, in the post-crisis years it is no longer so enthusiastic.

This was said by Levon Hampartzoumian, MB Chairman and CEO of UniCredit Bulbank last night in the 120 Minutes programme on bTV. He spoke to host Svetoslav Ivanov on the effect of the lowering of the base interest rate of BNB to 0%, of the small print in loan contracts and of the tips the banker would give people as to when it is good to take a loan.

“Historically, the low base interest rates of central banks all over the world and here as well are also an indirect hint to banks”, added Mr. Hampartzoumian. He explained that the base interest rate of the central bank is the price of money in bulk, but it does not directly affect the price of individual loans and is one of the many factors which determine loan interest rates. At the same time the trend of low interest rates is not only in Bulgaria, but also in the Eurozone and around the world.

Hampartzoumian said that today in Bulgaria the price of almost all loan classes is significantly lower than its pre-crisis levels. “Then people were feeling more confident in their future, there was enthusiasm for consumption and investments. Whether it was based on some real factors or some sentiment – it is always a combination. Yet, the more predictable the environment and the more confident we are about the future, the more we will be spending and will be even borrowing to spend.”, said the banker.

To the question whether he would advise people to read the small print in contracts, Hampartzoumian explained: “Did you know that small print is actually an American English idiom which in fact does not mean small font, but unclear text. That is why, if I had to give advice to people who consider taking a loan, it would be: first, take a loan when they need one; second, take it when they believe they understand the conditions of the specific loan; and third, make sure they can afford it and not only in their good years”, commented the banker.

To the question whether the time of rushed loans is over, Mr. Hampartzoumian answered that “unwise personal decisions will never end”. “In general Bulgarians are wise and responsible. Their loan taking culture is pretty conservative and cautious.”, Mr. Hampartzoumian said.

According to him it is important that people understand what is written in the loan contract. He said that if people didn’t understand it, they shouldn’t be shy to ask. “It would be best to ask at the bank, but if the bank does not give a satisfying answer, they have to ask other people who understand this matter and receive competent advice.”, recommended the banker.

More information for media:

UniCredit Bulbank, Identity & Communications Department

Viktoria Blajeva, Phone: + 359 2 9264 993, wjlj/ebwjepwbAvojdsfejuhspvq/ch