CBN Survey Shows Businesses Expect Lower Borrowing Costs in 2026
In a significant shift in market sentiment, businesses in Nigeria expect borrowing rates to decline in the coming months as optimism regarding the stability of the Naira grows. According to the latest Business Expectations Survey (BES) released by the Central Bank of Nigeria (CBN), the outlook for the first quarter of 2026 suggests a potential easing of the hawkish monetary environment that dominated 2025.
The survey, which polls hundreds of firms across the industrial, services, and agricultural sectors, indicates that the "Business Confidence Index" is on an upward trajectory. This positive outlook is largely fueled by the belief that the current exchange rate reforms are beginning to yield sustainable results.
Key Highlights from the CBN Survey
Lower Interest Rate Expectations: A majority of the surveyed firms believe that lending rates will ease by the end of Q1 2026. This follows a period of record-high Monetary Policy Rates (MPR) used by the CBN to curb inflation.
Naira Appreciation Trends: Businesses expressed strong optimism that the Naira will continue to gain strength against the US Dollar. This confidence is linked to improved FX liquidity and the "willing buyer, willing seller" market mechanism.
Expansion Plans: With the projection of cheaper credit, more companies are indicating plans to increase their capital expenditure (CAPEX) and expand their operations, a sharp contrast to the contractionary stance seen in mid-2025.
The "Naira Optimism" Factor
The survey reveals that the "reset" initiated by CBN Governor Olayemi Cardoso is finally anchoring expectations. As the volatility in the FX market reduces, the risk premium charged by commercial banks is expected to shrink. "When the currency is stable, the cost of risk reduces, and banks can afford to be more competitive with their lending rates," the report suggests.
The Real Estate & Housing Impact: Why This Matters
For the Nigeria Housing Market, a drop in borrowing rates is a critical catalyst for growth:
Cheaper Construction Finance: Real estate developers, who often rely on short-term high-interest loans to fund projects, could see their "cost of carry" reduce significantly. This could lead to a stabilization—or even a slight reduction—in the price of new-build homes.
Mortgage Accessibility: As borrowing rates ease, the Federal Mortgage Bank of Nigeria (FMBN) and primary mortgage institutions may be able to offer more attractive rates to end-users, potentially boosting homeownership figures.
Increased Project Commencement: Many developers "paused" projects in 2025 due to interest rates exceeding 30%. A projected ease in rates is expected to trigger a "construction boom" in major hubs like Lagos, Abuja, and Port Harcourt in the second half of 2026.
