Coronavirus caused Cheap but Unavailable Loans

Kenyan Cash in Banknotes

The COVID-19 pandemic has forced lenders to charge very low interest rates on new loans given but the advance rate is low.

Banks are too strict on who to give loans to .This was brought about by the high defaulting rate in the market.

According to the Central Bank's data ,the average interest rate charged on new loan facilities issued by the regulated commercial banks is 11.89 per cent. This is the lowest average rate since 1991.

The latest reports from the bank's regulator also shows that very many borrowers defaulted while others asked for loan moratorium. The value of defaulted loans was recorded at ksh 379.9 billion a big increase from the last record of ksh 349.9 billion four months ago.

Kenyans with a good Credit score and Credit history can however continue enjoying cheap loans at an average of 11.89 per cent.

Apart for the pandemic effects, Monetary Policy  Committee (MPC) keeping the Central Bank Rate (CBR) down at 7.00 per cent repeatedly contributed to the existence of affordable loans.

There have been negative expectations when the rate cap was lifted last year in November where borrowers expected expensive loans.

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