The Bank of Namibia’s (BoN) Monetary Policy Committee voted to raise the repo rate by 25 basis points to 7.25% on Wednesday.
Although this was not welcomed news, it was expected. This decision follows the South African Reserve Bank’s (SARB) decision to raise its repo rate by 50 basis points in March 2023.
As the French President, Emmanuel Macron, would say, it’s time to “se serrer la ceinture” – tighten one’s belt. With Namibian analysts predicting that there will be another rate hike in June 2023, ideally, they expect local interest rate hikes will continue to be implemented until inflation shows signs of moving closer to 6%, as outlined in previous reports.
As interest rates rise, consumers need to keep in mind that all debt will become more expensive.
As such, prioritising paying off any bad debt first and trying to avoid taking on any new debt in the coming months will be a good idea.
Rising repo rates affect affordability. Homeowners must plan and make room in your budgets to afford slightly higher monthly bond instalments. Ensure you have enough disposable income left after your bond repayment – factoring in the rising living costs.
Want a clear picture of what you can and can’t afford? You can use the Bank Windhoek bond calculator https://www.bankwindhoek.com.na/Pages/Calchome.aspx.
As a guideline, due to the latest interest rate hike, home loan repayments over twenty years at the home loan rate are likely to increase as follows:
- N$750,000 bond – extra N$130,35 (repayment incr. from N$ 8,127.80 to N$8,258.15)
- N$1,000,000.00 bond – extra N$173,79 (repayment incr. from N$10,837.07 to N$11,010.86)
- N$2,000,000 bond – extra N$347,08 (repayment incr. from N$21,674.14 to N$22,021.72)
- N$3,000,000.00 bond – extra N$521,37 (repayment incr. from N$32,511.21 to N$33,032.58)
For now, we are all tightening our belts and trying to find ways to make less money go further.
For enquiries, text, call or email Justina Hamupembe at +264812726001 or justina@chili.com.na.
