The Monetary Policy Committee (MPC) of the Bank of Namibia has decided to increase the Repo rate by 50 basis points to 6.75% from 6.25% in the meeting held on 29 November 2022.
Analysts predict that the Bank of Namibia is expected to continue increasing rates into 2023. However, the pace and magnitude of these hikes will slow down. High inflation and weak economic growth continue to shape global conditions alongside monetary and fiscal policy responses are among the reasons for the interest rate hike.
Affordability has taken a knock over the last 12 months, with home loan rates rising from 8.5% in November 2021 to 11.50% in December 2022. This has eaten into the average consumer’s disposable income to a significant degree. So, property owners, plan and make room in your budgets to afford slightly higher monthly bond instalments.
Make sure you have enough disposable income left after your bond repayment – factoring in the rising costs of living, such as fuel and food prices.
Existing homeowners can use the Bank Windhoek bond calculator
https://www.bankwindhoek.com.na/Pages/Calchome.aspx ) to calculate their new instalment.
For example, an instalment for a N$ 2,000,000.00 bond at the old home loan rate of 11.00 % has an instalment of about N$ 20,643.77 with the new rate of 11.50 % the monthly instalment is about N$ 21,328.59. That is an additional N$ 684.82 you have to pay. And since November 2021, monthly repayments on a N$2 million home loan have increased by almost N$3,972.12.
It is important to note that the latest interest rate hike was to be expected, especially considering global trends. With interest rates and inflation rising worldwide, it could be expected that most central banks would increase rates in response to global uncertainty. Therefore, homeowners should work on reducing their debt levels, as affordability will become an increasing concern over time.
Property owners and consumers face a bleak festive season and an even bleaker start to the new year. So if you plan on selling next year, it will become even more important to pick agents with excellent negotiating skills that work for reputable agencies with access to resources that will ensure your home gets maximum exposure to potential buyers and sustain the transaction through registration.
For enquiries Text, Call or email #yourhomegirl Justina Hamupembe
Cell: +264812726001
Email: justina@chili.com.na
