Namibians paying off home loans and vehicles could face higher monthly repayments if the Bank of Namibia increases the repo rate by 25 basis points on Wednesday, 28 October, with homeowners potentially paying an additional N$168 per month and vehicle owners N$44.
According to Simonis Storm Economist Almandro Jansen, the expected increase would push the repo rate from 6.75% to 7%, raising commercial banks’ prime lending rate from 10.5% to 10.75%.
For someone paying off a N$1 million home loan over 20 years, monthly repayments would increase from N$9,984 to N$10,152, adding N$168 per month or N$2,016 annually.
However, when combined with the previous interest rate increase in June, the total increase in monthly home loan repayments would reach approximately N$336, equivalent to about N$4,000 annually.
“On a N$1 million home loan over 20 years, a 25bp hike adds about N$168 a month to the instalment (from N$9,984 to N$10,152). Including June’s hike, the instalment has risen by about N$336 a month, or roughly N$4,000 a year. On a N$350,000 vehicle loan over six years, the increase is about N$44 a month,” Jansen said.
For motorists financing a N$350,000 vehicle over six years, monthly repayments would rise from N$6,573 to N$6,617, an increase of N$44 per month or N$528 annually.
The increases would place additional pressure on household budgets at a time when consumers are already dealing with rising fuel, transport and electricity costs.
Petrol prices increased by N$1.50 per litre on 7 October, while NamPower implemented a 3.7% electricity tariff increase. Jansen also warned that further fuel price increases were likely in November.
He said the actual increase in loan repayments would depend on the outstanding loan amount, repayment period and interest rate charged by individual banks.
The calculations are based on standard loans with monthly repayments, using a prime lending rate calculated at 3.75 percentage points above the repo rate.
While borrowers could face higher repayments, Jansen said people with savings and money-market investments could benefit from improved interest earnings.
“Savers, by contrast, should see deposit and money-market rates reprice upward, and on our view they are close to their peak for this cycle,” he said.
Simonis Storm expects the Bank of Namibia’s Monetary Policy Committee (MPC) to increase the repo rate by 25 basis points, assigning a 70% probability to the decision.
Jansen places a 25% probability on the central bank keeping the repo rate unchanged at 6.75% and a 5% probability on a larger increase of 50 basis points.
If implemented, the increase would be the second in the current interest rate tightening cycle, following the June adjustment to 6.75%.
Jansen expects the repo rate to remain at 7% in December, although another 25-basis-point increase could follow in early 2027 if South Africa raises interest rates again or Namibia’s inflation rate exceeds 6%.
Simonis Storm does not expect interest rate cuts before late 2027.
The expected increase comes as Namibia’s inflation rate reached 5.4% in September, while the South African Reserve Bank raised its repo rate to 7.25% during the same month.
This left Namibia’s repo rate 50 basis points below South Africa’s, adding pressure on the Bank of Namibia to consider a further increase.
The central bank’s decision on Wednesday will determine whether homeowners, motorists and other borrowers face another increase in monthly repayments as living costs continue to rise.
