By Mbatjiua Ngavirue WINDHOEK The commercial banks wasted no time in adjusting their lending rates following the half percent increase in the bank rate decided on by the Bank of Namibia on Friday. First National Bank led the way, increasing its prime rate from 12.75% to 13.25% on the same day as the increase in the bank rate. Bank Windhoek quickly followed suit implementing a similar increase Saturday, while Standard Bank has announced its prime rate will increase to 13.25% today. All three banks confirmed the mortgage home loan rate would also increase from 12.75% to 13.25%, and the same is expected to apply to vehicle finance and asset finance. The half percent increase may not amount to much on its own, but this is the third interest rate increase this year bringing the total for the year to 1.5%. Manager of the Treasury Department at Bank Windhoek, Diederick Kruger, said consumers will pay roughly only N$180 more a month on a mortgage of N$500 000. However, if you take into account all three increases this year the same homeowner will be paying N$530 a month more. Most homeowners in this bracket will probably feel the pinch of having to dig an extra N$530 out of their pockets every month, particularly in the present climate of high fuel and ever-rising food prices. “The announcement of the interest rate increase was in line with market expectations. The hike was mostly seen as necessary to curb the risks posed by rising inflation. “Also, the Monetary Policy Management Committee felt that the bank rate adjustment is mainly aimed at taming robust consumer demand funded by bank credit,” said Standard Bank Managing Director Theo Mberirua. Acting Director and Senior Economist at the Namibia Economic Policy Research Unit (Nepru) Klaus Schade agreed with this assessment. Schade said the increase in interest rates was a reaction by the central bank to other economic developments, such as inflation. Monetary policy, he added, is the major tool to control inflation because when interest rates are increased money becomes more expensive. “Usually consumers and businesses become more cautious about taking loans. Demand for goods and services decreases thereby bringing down inflation,” Schade remarked. He however worried that because this was the third interest rate increase for the year, it might have an impact on investment decisions. “If companies don’t invest, they don’t create employment and generate income, which therefore impacts on economic growth,” he said.