By PRINCE MABUMBA
THE Bankers Association of Zambia (BAZ) has projected an increase in loan lending rates from 25.7 percent to at least 26 percent on average depending on the lending institution.
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Speaking in an interview with Millennium TV, BAZ chief executive officer, Leonard Mwanza explained that this is as a result of the loans being linked to the Monetary Policy Rate (MPR), which has been adjusted upwards by 50 basis points.
“The implication, particularly, to those that have borrowed and intend to borrow from the banking sector , as I said interest rates have been adjusted upward so this entails that all the lending rates will be adjusted upwards and banks will be notifying their clients on this expected increase in lending rates.
“As always, it a choice a customer takes whether to maintain their current loan instalments and increase the loan tenure or likewise they can choose to increase their monthly loan instalments and maintain the loan tenure so those are the two options that the banks will offer the borrowing public in terms of how they can manage the increment,” Mr Mwanza said.
He encouraged borrowers to stick to suitable loan plans that will not be a drain to their income and repayment plans. “You can increase your low instalment and maintain the loan tenure or likewise you can choose to maintain the current loan repayment before the adjustment but then the bank will have to increase the period in which the loan has to be repaid,” he said.
On Wednesday, the Bank of Zambia (BoZ) adjusted the MPR upwards by 10 basis points from 9.50 percent in May 2023 to 10 percent.
Central bank Governor, Denny Kalyalya said the decision to increase the MPR was arrived at by the Monetary Policy Committee at its meeting held on August 21 and 22, 2023.
Dr Kalyalya said the decision was informed by recognition that inflation not only persisted above the six to eight percent target band during the second quarter of the year but moved away from the target in July, 2023.
He said the inflation rate is projected to remain above the target band over the forecast horizon and has warned that if left unchecked, it would undermine the gains already made in restoring macroeconomic stability.
Dr Kalyalya said monetary policy can best support these efforts by steering inflation back to the six to eight percent target and anchoring inflation expectations.
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