Mortgage rates likely to fall as lending rate drops

The reduction of the Bank of Zambia’s (BoZ) Monetary Policy Rate (MPR) from 13.25 percent to 10.75 percent is likely to result in lower mortgage rates as the reduction trickles to commercial banks.

Speaking in an interview with the Zambian Business Times – ZBT, Economist Trevor Hambayi said the MPR serves as a benchmark for financial institutions when determining lending rates, including rates charged on mortgages.

“The Central Bank issues out the monetary policy rate, which is the benchmark under which financial institutions are able to determine the lending rates, and yes, it includes mortgages,” he said. Hambayi, however, noted that the reduction in mortgage rates would not necessarily occur immediately, as banks consider several factors when pricing loans.

He said the reduction in the policy rate is intended to support increased lending and improve access to capital for the private sector, in line with the broader economic growth agenda.

According to Hambayi, the cost of capital and the duration of a mortgage are among the factors that influence the rate charged by financial institutions.