Average percentage rates charged on Mortgage and Agriculture loans by universal banks was 30.4% each in January 2018, the cheapest for the review period. This compares with average percentage rates of 30.2% and 31.1% charged on Mortgage and Agriculture loans respectively in December 2017.

This was disclosed in a recent publication by the Bank of Ghana on the annual percentage rates (APR) and average interest (AI) paid on deposits as at 31st January 2018.

Manufacturing loans followed with average percentage rate of 30.7% compared with 31.0% in December 2017. Meanwhile, the report ranked construction loans and vehicle loans as the most expensive in January 2018. According to the report, average percentage rate on construction loans increased marginally from 31.5% in December 2017 to 31.6% in January 2018. In contrast, average percentage rate charged on vehicle loans dropped from 31.7% in December 2017 to 31.5% in January 2018.

The report also disclosed that average base rates by the universal banks declined marginally from 25.7% in December 2017 to 25.6% in January 2018.

Banks have responded positively, albeit at a slower rate, to cuts in the Bank of Ghana policy rates by reducing the cost of borrowing. The Bank of Ghana has since November 2016, reduced its policy rate by some 550bps from 25.5% to 20.0%. This compares with a 240bps reduction in banks average base rates from 28.0% to 25.6% for the same period.

The graph below shows average percentage rates on loans in December 2017 and January 2018.