The National Housing Enterprise clients who tightened their financial belts during the last couple of months due to the devastating impact of Covid-19, coupled with a persistent domestic recession as well as escalating fuel and food prices, now face another hike in lending rates.
In a statement released this week, NHE acting sales and lending executive Ludwina Alex said in response to Bank of Namibia’s increase of the repo rate with 50 basis points from 4.25% to 4.75% last month, NHE hereby announce the increase of its prime and mortgage lending rates by 0.5%. The new rates now stand at 8.25% from 7.75% for both.
The repo rate is the level at which commercial banks borrow money from the central bank, and in turn, determines interest rates for consumers.
The interest rate change is effective from Monday, 1 August 2022. Ludwina added the increase is impacted by the global economy due to the aftermath of the pandemic and NHE’s high cost of borrowing.
In economic terms, a hike in the repo rate increases the cost of borrowing in the economy for domestic consumers and businesses. This in turn reduces purchasing power and investment capacity, thereby, in theory, the move should help reduce inflation. However, the repo rate increase pours more misery on Namibian consumers, most of whom rely heavily on debt to survive.
Head of research at High Economic Intelligence Salomo Hei, commented rate hikes would negatively impact many who depend on debts.
According to Hei, Namibia is now fully in the midst of an interest rate hike cycle.