Mozambique: Prime rate down to 18.5% in August

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Mozambique: Prime rate down to 18.5% in August

7:33 CAT | 31 Jul 2019

Picture: Lusa

The benchmark interest rate of the Mozambican financial system (prime rate) is to decrease in August from 19.3% to 18.5%, the Association of Mozambican Banks and the central bank said in a statement on Wednesday.

This is the second consecutive decrease this year in a movement to alleviate borrowing costs.

The figure of 18.5% will take effect from Thursday.

Since it was created in May 2017, the benchmark rate has never risen and has now fallen by 9.25 percentage points.

The creation of the prime rate was agreed between the central bank and the Mozambican Banking Association (AMB) to eliminate the proliferation of reference rates in the cost of money and came into force on 1 June 2017.

The aim was for all credit operations to be based on a single rate, plus a spread, which will be added to or subtracted from the prime rate through risk analysis of each contract, the promoters said.

Another table released on Wednesday by the Mozambican Association of Banks and the central bank presented the standard spread (interest rate increase) of 17 credit institutions.

In loans to individuals and depending on the bank, this margin varies between 2.50 and 40.70 percentage points for consumer credit and between one and six points for housing credit.

In loans to enterprises, the margin can be zero or go up to 22.70 points for loans up to one year or vary between one and 22.70 points for longer maturities.

Leasing transactions are subject to spreads between two and 5.50 points for leasing securities and between 1.50 and 5.50 for leasing real estate.

Source: Lusa