FINANCIAL powerhouse Kingdom Financial Holdings Ltd (KFHL) yesterday hiked its minimum lending rate (MLR) to 87%, sending shock waves in the market where analysts predict
rates could soon reach 100%.
KFHL was last month charging 80% as its MLR to customers.
Most commercial banks are now charging an MLR of more than 75%.
Banks contacted yesterday said they were increasing MLRs because inflation continued to skyrocket.
Analysts said MLRs would continue soaring in tandem with inflation presently pegged at 364,5%.
It stood at 300,1% in May.
Bank MLRs were yesterday as follows – Century Bank (88,5%), Barclays Bank of Zimbabwe (88%), First Bank Corporation of Zimbabwe (82,5%), Jewel Bank of Zimbabwe (81,5%), Stanbic Bank of Zimbabwe (80%), Standard Chartered Bank of Zimbabwe (80%), NMB Bank (75%), Trust Bank (75%), Time Bank of Zimbabwe (74,5%), Royal Bank of Zimbabwe (69%) and Zimbabwe Banking Corporation (68%).
Mortgage rates will also shoot up next month, shattering hopes of potential home seekers and coming when financial institutions are facing nightmares trying to secure cash from customers and the RBZ.
The country’s building societies have been the hardest hit by the present serious cash shortage bedeviling Zimbabwe.
The nation’s leading building society, the Central African Building Society (Cabs) this week told all mortgagors that it would increase rates with effect from August 1.
The rates vary according to purpose but the increment ranges from between five and eight percent.
The Zimbabwe Building Society (ZBS) this week said it was not increasing rates for the time being, while financial powerhouse Intermarket Holdings Ltd, which operates Intermarket Building Society, did not respond to written enquiries on the issue.
“Proposals to increase mortgage loan interest rates are being considered,” a ZBS spokesman said in an interview. “These will be published at an appropriate time. The society is still granting mortgage loans subject to availability of funds.”
Cabs managing director David Stephenson said for customers seeking working, commercial, and industrial capital amounting to $100 million rates would change from 45% to 53%.
From the current mortgage rate of 42% schools would now pay 47%.
Vacant land which attracted a fee of 45% would now fetch 53% interest, while non-trading company and trust residential areas would attract a fee of 45% up from 42% previously.
Non-owner occupied residential properties would attract an interest of 45% from the 42% charged previously, while owner-occupied low and high density properties worth $20 million would attract a fee of 43% up from 37%.
Stephenson said effective August 1 interest payable on savings accounts calculated on a daily balance for accounts with a monthly average balance of $200 000 or more would attract an interest of 7%.
“Current interest rates in the market place have increased considerably due to the increase in the cost of funds,” said the ZBS spokesman.
“This is as a result of the hyperinflationary environment where all costs are rising everyday. ZBS has not been spared in this respect.”