Chart of the week

The interest rate hiking cycle that began in January 2022 has placed considerable pressure on consumers and their purchasing power. Over the subsequent 18 months, the Namibian prime rate increased from 7.5% to 11.5%, causing home loan instalments to rise sharply, far outpacing consumer inflation.

At the most recent monetary policy committee meeting, the Namibian repo rate (and thus prime rate) was reduced for the first time in over a year, dropping the prime rate from 11.5% to 11.25%. With the United States recently cutting its key rate by 50 basis points and South Africa following with a 25-basis-point cut last week, it appears we have officially entered a rate-cutting cycle. Further reductions to the Namibian prime rate are anticipated in the coming months, offering significant relief to consumers.

For instance, a 1% interest rate cut would lower your monthly home loan instalment by 6.1%, equating to a saving of N$1 046 per month on a N$1.5 million loan. A return to the 7.5% prime rate of January 2022 would reduce monthly instalments by 22.4% compared to current rates -saving N$3 761 per month on the same loan amount.