Average interest rates on loans drop to 21.26 percent

Business news for Wednesday, November 25, 2020

Source: businesszoneonline.com

2020-11-25

Average commercial bank loan rates have fallen 0.11 percent between August 2020 and October 2020.

However, between January 2020 and October 2020, it fell by 1.8 percent.

Although marginal, it bodes well because the cost of borrowing in the country continues to decline.

According to the Bank of Ghana’s November 2020 Economic and Financial Data Summary, Ghana’s benchmark rate also continues to fall from 16.13 percent in January 2020 to 14.75 percent in October 2020.

However, the cost of credit varies between commercial banks.

Some banks offer loans as low as 17 percent, while others have rates as low as 27 percent. However, it also depends on the risk profile of the customer.

But this is much better than in 2015, 2016 and 2017, where rates reached 38 percent annually.

Regarding interest rates on Government of Ghana securities, the rates have been relatively stable.

For example, the yield on 91-day Treasury bills has been relatively stable at 14.02 percent between August 2020 and October 2020.

However, the yield on the 182-day T-Bill has remained around 14.10 percent between August 2020 and October 2020.

Fitch Solutions expects Ghana interest rates to ease

The research arm of the rating agency, Fitch, previously forecast a drop in interest rates in the country, starting early next year.

He linked it to a further drop in the country’s inflation rate next year, which will then remain in the single-digit range.

William Attwell, senior country risk analyst for sub-Saharan Africa, said that a further drop in inflation will lead to easing of monetary policy and interest rates.

“It is expected that monetary policy will relax during 2021 due to a new fall in inflation. We expect inflation to decline even more next year and that will also facilitate that process. That’s really austere on the monetary front for Ghana. “