Rate cuts unlock bank competition

SHOPPING around for a housing loan could save Namibians thousands, with the four commercial banks now competing and offering different mortgage rates following pressure from the Bank of Namibia (BoN) to narrow the gap between its repo rate and their prime lending and home loan rates.

Local commercial banks responded to BoN Governor Tom Alweendo’s last appeal to reduce the spread of 475 basis points after a debate on the big difference between the bank and prime lending rates flared up in Namibia and South Africa recently.Unlike their Namibian peers, commercial banks in South Africa ignored South African Reserve Bank (SARB) Governor Tito Mboweni’s tirade about the spread. When the SARB dropped its repo to 7,5 per cent, they decreased their prime lending rates to 11 per cent, keeping their interest spread at 350 basis points.Locally, Nedbank Namibia yesterday became the last bank to drop its rates – 12 days after the BoN’s latest repo cut of 50 basis points took effect.They decreased both their prime lending and mortgage rates by 75 basis points to 12 per cent. This puts Nedbank Namibia on par with FNB Namibia.Bank Windhoek also offers a prime lending rate of 12 per cent. However, its home loan rate is 25 basis points more and stands at 12,25 per cent.Standard Bank offers the best deal in town when it comes to prime lending and mortgage rates. The bank dropped both rates by one percentage point to 11,75 per cent.In dollar and cent terms, this means that a Standard Bank Namibia home loan of N$500 000 is between N$80 and N$170 per month cheaper than those of the other commercial banks.This translates to a yearly saving of between N$960 and N$2 040. Over 20 years, it amounts to between N$19 200 and N$40 800.On a transaction of N$1 million, a Standard Bank home loan will save the consumer between N$345 and N$170 monthly, while the yearly saving will vary from N$2 040 to N$4 140. Over 20 years, the amount can run up to N$82 800.The BoN is expected to discuss the interest rate spread with the Bankers Association of Namibia (BAN) when they have their quarterly meeting tomorrow.jo-mare@namibian.com.na