The Central Bank of Nigeria (CBN), under Governor Yemi Cardoso, has increased the monetary policy rate (MPR) by 750 basis points so far, from 18.75% to 26.25%, with an eye on combating inflation and fostering economic stability.
Nigeria’s real estate sector remains a critical part of the economy, and securing favourable lending rates is paramount for developers and investors.
Banks offer various lending rates tailored to the needs of real estate businesses. Borrowers should consider both prime and max lending rates, along with their specific financial circumstances, to choose the best banking partner for their real estate investments.
The prime rate indicates the best possible rate offered to the most creditworthy customers, while the maximum rate suggests the upper limit of interest rates for loans provided to the sector, which might apply to higher-risk scenarios or different loan structures.
As of May 10, 2024, here are the top 10 banks with the lowest prime lending rates for real estate businesses in Nigeria. The categorization is based on the CBN’s weekly interest rates data.
10. Access Bank
Access Bank offers a prime lending rate of 22%, which is the highest among the top 10. However, the maximum lending rate of 28.5% indicates some flexibility in loan agreements, which could lead to higher borrowing costs for riskier clients.
9. Globus Bank Ltd
With a prime lending rate of 21.41%, Globus Bank Ltd provides competitive initial rates. The max lending rate mirrors that of Access Bank, suggesting a similar risk premium structure for real estate loans.
8. Stanbic IBTC
Stanbic IBTC offers a prime rate of 20.5%. However, with a significant max lending rate of 38.4%, borrowers should be cautious of potential rate hikes due to varying credit risks or market conditions.
7. Guaranty Trust Bank
Guaranty Trust Bank’s lending rates are fixed, with both prime and max rates at 20%. This consistency can benefit borrowers seeking predictability in their financing costs.
6. Greenwich Merchant Bank
Offering a prime rate of 20%, Greenwich Merchant Bank has a slightly higher max rate at 25%, providing some room for rate adjustments based on borrower risk profiles.
5. Union Bank
Union Bank’s prime lending rate is competitive at 19.65%, but the high max rate of 33% could lead to substantial increases depending on loan conditions and borrower creditworthiness.
4. Citibank
Citibank’s 19.5% prime rate is favourable, though the max rate of 29% suggests potential variability and higher costs for borrowers with lower credit ratings or higher perceived risks.
3. Standard Chartered Bank
With a prime rate of 19%, Standard Chartered Bank offers attractive lending rates, with the max rate capped at 26%, providing a balance between affordability and risk management.
2. Nova Merchant Bank
Nova Merchant Bank offers a significantly lower prime rate of 12%, making it one of the most affordable options for real estate lending. The max rate of 20% ensures that even in riskier scenarios, borrowing costs remain relatively controlled.
1. SunTrust Bank
SunTrust Bank leads with the lowest prime lending rate of 7%, making it the most cost-effective choice for real estate businesses. The max rate of 10% further underscores its affordability, appealing to a wide range of borrowers seeking competitive financing terms.
Kindly note that this list is based on the latest data provided by the CBN as of May 10, 2024. The rate may change, especially with the new hike in MPR.