Benchmark interest rate in Mozambique to fall from 23.5% to 22.5% in June

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Benchmark interest rate in Mozambique to fall from 23.5% to 22.5% in June

1:53 CAT | 01 Jun 2018

File photo: TVM

The prime rate of the Mozambican financial system will fall from 23.5 percent to 22.5 percent in June, the Mozambican Association of Banks and the central bank announced in a statement yesterday.

Fixed on a monthly basis, the new ‘prime rate’ value goes into effect from today Friday, June 1st.

Since it came into force a year ago, the benchmark interest rate has fallen by 5.25 percent.

The creation of the prime rate was agreed on May 17, 2017 between the central bank and the Mozambican Association of Banks (AMB) to eliminate the proliferation of reference rates in the cost of money and entered into force on June 1, 2017 .

The objective is that all credit operations are based on a single rate, plus a spread added to or subtracted from the prime rate after risk analysis of each contract.

The maximum spread of 20 credit institutions is presented in another table published yesterday by the Mozambican Association of Banks and the central bank.

Among the five main banks in the country, margins vary between 9.5 and 12.5 percent for consumer credit, between 7 and 11.25 percent for short-term loans (less than one year), between 8 and 11.5 percent for long-term loans (over one year), between 2.75 and 8 percent for mortgage loans and between 5 and 10 percent for leasing/factoring.

Source: Lusa