Al-Muharreq: No increase in existing loan installments for individuals despite raising interest rates by 25 basis points
Amman3 min read
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The Director General of the Jordan Banks Association, Dr. Maher Al-Muharreq, confirmed that the decision of banks operating in the Kingdom not to reflect the recent increase in interest rates on existing loans granted to individuals means that there will be no increase in the installments of these loans as a result of the decision to raise interest rates, or increase their total value.
Al-Muharreq said that the decision of the Central Bank of Jordan to raise interest rates on monetary policy instruments by 25 basis points will not be reflected in the installments of existing loans for individuals, explaining that a borrower who was paying a certain monthly installment will continue to pay the same amount, without the increase being added to subsequent installments.
He explained that not reflecting the increase does not mean postponing it to a later period or deferring it to the end of the loan term or distributing it over the remaining installments, but rather means not burdening the individual borrower with the increase resulting from the current decision to raise interest rates.
He clarified that the decision covers existing loans for individuals with banks operating in the Kingdom, with the aim of helping borrowers to meet their financial obligations, noting that the total existing loans for individuals amounted to about 14 billion Jordanian dinars by mid-year.
The Central Bank of Jordan had decided, at the sixth Open Market Operations Committee meeting for 2026, to raise interest rates on all monetary policy instruments by 25 basis points, effective Monday, September 21, bringing the Central Bank's key interest rate to 6%.
Regarding new loans, Al-Muharreq explained that they are not covered by the decision not to reflect the increase, as they are subject to the future agreement between the bank and the customer, and based on the interest rates and conditions agreed upon at the time of the contract.
He called on citizens wishing to borrow to enhance their financial literacy before making a decision, by determining their actual need for financing, choosing the appropriate bank, knowing the nature of the interest rate applied to the loan, whether it is fixed or variable, in addition to comparing available offers and reading the contract terms clearly.
He stressed that borrowing should be at a size commensurate with the actual need of the citizen and his ability to repay, explaining that obtaining an amount exceeding the need means incurring an additional financial obligation.
Al-Muharreq pointed to the 'FINAPP' platform, launched by the Jordan Banks Association to enhance financial awareness, which provides information, resources, tools, and tips to help individuals better understand financial services and decisions and manage their money.
Regarding depositors and savers, Al-Muharreq said that the impact of interest rates on deposits is linked to the nature of the relationship between the bank and the customer and the terms of the deposit, including the deposit term, maturity date, and frequency of return.
He pointed out that raising interest rates enhances the attractiveness of saving in Jordanian dinars and gives dinar-denominated deposits a greater advantage, noting that the return varies according to the nature of the deposit and whether it is linked to an annual, semi-annual, or quarterly return.
The Jordan Banks Association had confirmed that the decision not to reflect the increase comes despite the rise in the cost of funds for banks, including interest rates on deposits, especially in foreign currencies, following the decision of the US Federal Reserve to raise the interest rate by 25 basis points.
