Banks cut interest rates

0

Banks have started reducing lending rates in line with an agreement with the Reserve Bank of Zimbabwe (RBZ) to cap interest rates at 18 percent per year with effect from the 1st of next month.

The dollar sign (R) is seen alongside the signs for other currencies above a currency exchange shop in Mongkok shopping district in Hong Kong October 30, 2014. REUTERS/Damir Sagolj

The dollar sign (R) is seen alongside the signs for other currencies above a currency exchange shop in Mongkok shopping district in Hong Kong October 30, 2014. REUTERS/Damir Sagolj

The agreement to cap interest rates at 18 percent per year will result in prime borrowers with low credit risk being charged between six and 10 percent per annum,  borrowers with moderate risk 10 to 12 percent, while  those with high credit risk will pay between 12 and 18 percent per year.

Real estate loans will attract annual interest rates between eight and 16 percent while loans for consumptive purposes will cost between 10 and 18 percent.

Bankers Association of Zimbabwe (BAZ) past president, Mr John Mushayavanhu confirmed to the ZBC News that there has been a gradual downward revision of lending rates as banks seek to increase production and savings.

“This is really happening and it is a development that will in the long term increase macro- economic confidence,” he said.

“The downward revision of interest rates will also increase depositor confidence in the financial sector. There is going to be an improvement in terms of how people will invest their funds in the banks,” an economic analyst, Dr Chris Kasiyazi.

Firms and households have in the past few years been failing to access loans from banks due to high borrowing costs.

Share.