Mortgage lending rates in Ghana have seen a marginal decline, with the average rate for households and businesses now standing at 30.79%, according to the Bank of Ghana’s 120th Monetary Policy Committee report.
Despite this small reduction, borrowing costs remain high, reflective of broader economic conditions.
In August 2024, the weighted average lending rate on the interbank market rose to 28.84%, up from 26.59% in the same period last year. This upward trend in lending rates signals tightening financial conditions, likely driven by monetary policy adjustments aimed at controlling inflation and addressing economic pressures.
Although the average lending rate for households and businesses decreased from 31.78% to 30.79%, the modest drop in borrowing costs offers some relief for borrowers, particularly those looking to finance property purchases or developments. However, mortgage rates in Ghana remain elevated compared to international benchmarks, limiting the potential impact on the housing market and overall investment activity.
Credit growth in the private sector showed positive signs, accelerating to 21.7% in August 2024, compared to a 10.7% expansion in August 2023. This marks a significant recovery from the 21.0% contraction in real terms seen the previous year. The improvement suggests stronger demand for loans and more favorable lending conditions amid a stabilizing economic environment.
While the reduction in lending rates is small, it could help stimulate economic activity by easing borrowing costs. The full impact will depend on broader economic conditions and whether access to credit improves for both consumers and businesses.
