Credit appetite slumps on expensive loans

New bank loans have taken a hit since May when it became clear that lending rates would soar to interrupt demand and drive away prospective borrowers. Growth in the aggregate private sector loans was slowest in August and September where commercial banks lent Sh31 billion and Sh35 billion respectively.

A monthly breakdown of credit expansion for the year shows the two months as the hardest-hit, down from a peak of Sh53 billion in April. Several prospective borrowers who had talked to the Standard had indicated that they had decided to shelve spending plans altogether or to a later date when lending rates are friendlier. "Loans have become too expensive that I do not think I will borrow now," Joseph Njoroge said, capturing the sentiments shared by thousands of other borrowers.