Local banks slash lending rates

Bank Windhoek (BW) and Standard Bank Namibia (SBN) has cut rates by 25 basis points following an announcement by Bank of Namibia (BoN) that the Repo rate was cut 25 basis points to 6.25 per cent from 6.50 per cent last week.

In response to the announcement by BoN to decrease the policy rate as announced, BW hereby confirm the reduction of its Prime Lending Rate by 0.25 per cent from 10.25 per cent to 10.00 per cent while Mortgage Lending Rate will decrease from 11.25 per cent to 11.00 per cent, a media statement availed to Nampa on Friday indicates.

BW interest rate changes will be effective from Wednesday 4 March 2020.

The repo rate is defined as the rate at which commercial banks borrow money from the Central Bank and in turn, determines the interest rates charged to consumers.

The Head of Funding and Liquidity Management at BW, Diederik Kruger has said that the reduction in interest rates is aimed at resuscitating the economy to give much-needed relief to consumers.

It will also be sufficient to protect liquidity in the local market and lower the government's cost of funding at the shorter end of the curve. I hope that the decrease in interest rates and lower house prices will help new or first-time buyers to own a house of their own. We recommend that clients make use of this opportunity to pay off their debt quicker or start saving to give them a buffer against unforeseen expenses, Kruger said.

Kruger added that the SA Reserve Bank also lowered its interest rate in January 2020.

Standard Bank's Prime Lending rate was decreased from 10.25 per cent to 10 per cent on Home loans, Vehicle and Asset Finance and Personal loans effective from 20 February 2020.

SBN's, Head of Products Peter Hiwilepo, has expressed hope that the reduction in Prime Lending rate will give some marginal relief to customers because of the expected reduction in their repayment instalments on home bonds, vehicle and other loans.

Consumers are, however, urged not to borrow more than they can afford to repay and also not to reduce the instalments on their loan repayments due to the rate cuts, he said.

Source: Namibia Press Agency