Average lending rate of commercial banks shot up by 2.66% between April and June 2022 to 24.27%.
This is equivalent to 2% interest rate on loans per month.
According to the Summary of Economic and Financial Data by the Bank of Ghana, average cost of borrowing has been going up from 20.1% in January this year to 24.2%.
This is as a result of the rising inflation rate and other factors.
However, the average lending rate varies among the banks and the respective sectors that they lend to.
For instance, some banks will offer loans equivalent to the Ghana Reference Rate of 20%, whilst others will charge rates as high as 33%.
Overall, it will also depend on the risk profile of the customers.
Again, some perceive lending to the agriculture and construction sectors as riskier, and therefore credit to these sectors are expensive.
According to data from the Bank of Ghana, cost of loans rose marginally from the beginning of this year due to increasing inflation rate and other factors.
It went up from 20.16% in January 2022 to 20.52% in February 2022 and then to 20.57% in March 2022. It again went up to 21.61% in April 2022 and later to 22.53% in May 2022.
However, average lending rate fluctuated in the first quarter of 2021, and then fell consecutively till December 2021.
For now, it’s unclear whether cost of loans will stabilise or go up despite the monetary policy rate kept unchanged at 19% yesterday July 25th, 2022.