LENDING institutions expect loan demand to increase in the March 2015 quarter despite expectations of marginally higher interest rates, according to the Bank of Jamaica’s (BOJ) Quarterly Credit Conditions Survey Report.

Overall the demand for credit continues to rise for both households and businesses. The demand is forecast to reach 110.9 points in the March quarter up from 99.5 points in the December quarter and 98.7 points in the March 2014 quarter, according to the credit demand index found within the report.

“In particular, strong demand is expected for credit cards,” stated the report which added that the interest rates on credit cards are expected to remain stable at 46.3 per cent per annum but that other loans will see rises in interest rates.

“Lenders’ expect a general increase in interest rates in the March 2015 quarter. More specifically, interest rates on local currency personal loans are expected to increase,” stated the report published this week.

Average personal loans are forecast to see a rise in interest rates towards 19.67 per cent in the March quarter 2015 or eight-basis points higher than in the December quarter.

Lenders indicated that they expect interest rates to increase for Jamaica dollar facilities as Jamaica dollar liquidity challenges persist.

Interest on foreign currency loans are broadly expected to increase in the March 2015 quarter, despite a fall-off in demand for these loans.

“For the March 2015 quarter lenders anticipate a stronger increase in overall credit availability, reflecting expansions in all loan categories,”stated the report, adding that some creditors would find creative methods to finance the small business sector.

“Of note, some creditors indicated that given the importance of small businesses to the economy, they will utilise alternative sources of funding and design specific products in order to expand credit to this business segment,” stated the report.

Last January, the BOJ introduced its Credit Conditions Survey to the main lenders in the domestic credit market. The survey aims to increase knowledge of trends in the domestic credit market.