NAMIBIA EASES HOME LOAN CURBS TO BOOST THE ECONOMY

Wed 12 July 2023:

In an effort to revive the country’s long-depressed housing and construction sectors, Namibia’s central bank announced Wednesday that it is further relaxing curbs on house loans, Xinhua reported.

The construction industry, according to the Bank of Namibia, endured long stretches of slow growth that were exacerbated by credit restrictions on the real estate market.

The bank projects that the weak performance of the construction sector will cause GDP growth to drop to 3% this year from 4.6 percent in 2022.

“These developments compelled the committee to reconsider the existing loan-to-value regulation, which was implemented as a macro-prudential tool to contain speculative behavior in the housing market,” the bank said.

The central bank announced in 2017 that home buyers in Namibia would be required to put down larger deposits for second and subsequent properties to curb speculative buying.

The loan-to-value ratio for a second residential property was set at 80 percent of the purchase price or market value, whereas commercial banks backed 70 percent to 50 percent of third and subsequent loans.

Additionally, the central bank forbade homeowners from using the equity in their first home to buy a second one.

When the bank declared that buyers would only need to pay down 20% on third and subsequent properties in 2019, the limits were later eased.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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