Panamanians on alert for rising interest rates in banks

The imminent increase in interest rates by the banks in Panama have a multiplier effect in the economy of Panama and in the country.

So warns economist Juan Jované, after customers alerted by several means, an alleged increase in interest on mortgages, cars and consumer local banks, due to the adjustment in interest rates by the Federal Reserve of the United States (EDF).

In December last year, the Fed increased by 25 basis points in interest rates, putting the figure at 50.

To the economist, an increase in the benchmark rate to Panama, will certainly affect domestic rates, however, this more expensive credit reduces consumption and investment in the country.

Meanwhile, Giovanni Fletcher, legal representative of consumer associations, states that these entities give monitor the possible retroactive effect Panamanian banks intend to apply to its customers.

Fletcher says that banks have received send notes which communicate the implementation of an increase backdated to January.

In this regard, also president of the Panamanian Institute of Rights of Consumers and Users (Ipadecu) urges the Superintendency of Banks of Panama (SBP) to call to order banks, and take a hike, are met prior notifications to the clients.

"Consumers are not prepared to increase much less without notice". This will result in more Panamanians have less opportunity to obtain their own homes, cars or other property, said Fletcher.

However, the Superintendency of Banks of Panama explained that this entity does not regulate interest rates in Panama. They are free supply and demand according to market conditions.

He added that Panama interest rates are stable, reflecting the international market conditions.

"There is a measure of the local banks to increase interest rates across the board. However, individual banks handle the ups and downs in the lending and deposit rates, in accordance with the management of its financial margin and liquidity conditions. "

The company noted that the application clients is communicated directly by banks.

Since October 2015, before the Fed move, the Banking Association of Panama (ABP), and announced the possible effects it would have on the Panamanian consumers.

Mario De Diego, vice president of the ABP, explained that Panama raise lending rates and the rates paid on deposits, mainly fixed-term and somehow in savings.

"The banks in Panama have been preparing for this eventuality since we began to talk about the rise in the US Fed rate," said vice president of the Banking Association.