Follow Us on Google
By Chinwendu Obienyi
Interest rates on bank loans in Nigeria are expected to climb further in the first quarter (Q1) of 2026, a survey by the Central Bank of Nigeria said on Tuesday, underscoring persistent credit cost pressures even as other macroeconomic indicators show tentative signs of stabilization.
According to the Consumer Expectation Survey (CES) report for December 2025, 36 per cent of respondents observed a rise in interest rates on bank loans over the past 3 months (October, November and December). The report noted that 30.9 per cent anticipates a rise in interest rates in the next three months (January, February and March) this year.
“Majority of respondents prefer lower interest rates, with 59 per cent indicating a desire for rates to fall in December 2025. In the same month under review, 46.1 per cent of respondents expressed a desire to lower interest rates, regardless of the potential inflationary impact”, the survey said.
Although the CBN has maintained its benchmark Monetary Policy Rate at a restrictive level to anchor inflation expectations, corporate finance officers and small business owners alike flagged the cost of credit as a principal constraint on investment and working capital.
The consumer sentiment index revealed that the average price of some selected items reached 25.9 points in December 2025, indicating that consumers perceive the prices of these items to be relatively high.
“Consumers however anticipate a slight increase in the average prices of selected items in the next six months (H1) of 2026, reflecting expectations of gradual adjustments in market conditions”, the survey said.
While the December 2025 CES survey report also pointed to cautious optimism in some areas, including expectations for a steadier naira and firming demand in select sectors, the cost of buying was highlighted as one of the most significant operational hurdles for households.
“Buying condition index for high value products such as consumer durables, motor vehicles, and real estate, remained below the 50.0 mark across time frames, suggesting that a larger proportion of respondents feel it is not the right time to invest in these items”, the report said.
This sentiment underscores the broader impact of elevated borrowing costs and inflation on household decision-making. With disposable incomes under strain, consumers appear reluctant to commit to long-term financial obligations, particularly those that require access to bank financing.
The survey further shows that 62.4 per cent of households believe the Nigerian economy would weaken if prices were to rise faster than their current pace. This concern highlights the fragility of consumer confidence and the delicate balancing act facing monetary authorities as they seek to curb inflation without stifling growth.
Overall, the CES findings suggest that while there may be cautious optimism about currency stability and sector-specific demand, the outlook for credit conditions remains challenging.
With a significant share of consumers expecting further increases in lending rates in Q1 2026, the cost of borrowing is likely to remain a major drag on investment and consumption in the months ahead.
