Borrowing costs in Mongolia remain stubbornly high, even as credit demand continues to grow among households and businesses.

🔺 Still Above 10%

Mongolia’s lending environment remains tight. The policy rate hasn’t dipped below 10% since June 2022, keeping both loan and deposit rates locked in the 10%–20% range for the past 5 years. In September 2023, when the policy rate stood at 13%, the average one-year ₮ deposit rate among the TOP-5 banks was 12.2%, now it hovers around 12%. Yet, lending rates continue to edge upward.

• 📌 Slow Growth, Rising Costs: Most banks, except TDB (TDB), have raised their salary loan rates. Among them, TDB shows the widest gap between its lowest and highest rates at 5.4 percentage points. Across the TOP-5 banks, salary loan rates have increased by 1.3 percentage points in the past 2 years. That means if you take out a ₮30 million loan for 30 months, you’ll pay about ₮975,000 more in interest than before.
• 📈 Business Loans Also Getting Costlier: Corporate borrowers are feeling the pressure, too. The weighted average interest rate on loans issued to sectors outside agriculture climbed by 1.1 percentage points in the first half of this year compared with the previous quarter, signaling broader tightening across the economy.

‼️ High Demand, Higher Pressure

While nominal wages are rising, persistent inflation continues to erode purchasing power, keeping demand for credit strong. Beyond the banking sector, total lending from non-bank financial institutions has surged 45.4% year-on-year, 4.2 times higher than in 2021, reaching ₮5.1 trillion, with interest rates also on the rise.

Bottom line… Even as growth slows, Mongolia’s appetite for credit remains firm, fueled by inflation, rising import costs, and a weakening MNT. With these pressures persisting, interest rates are unlikely to fall below 10% anytime soon.