Bank of Namibia introduces new rules to facilitate home purchases
In a bid to reduce financial risks associated with purchasing multiple homes through mortgage bonds, the Bank of Namibia, acting on the recommendation of the Minister of Finance and Public Enterprises, has implemented amended regulations on loan-to-value (LTV) ratios.
These new rules, effective from 31 October 2023, provide greater flexibility for prospective homeowners, the central bank announced in a statement on Wednesday.
Replacing the previous Regulations on Restrictions on Loan-to-Value Ratios established in 2019, the updated regulations focus on the future Loan-to-Value ratio.
This ratio signifies the amount of money a banking institution lends to a borrower to buy a property about the property’s price or value, along with the deposit required from the borrower.
According to the central bank, one of the key changes involves a relaxation of LTV ratios for additional property purchases.
Now, a mortgage loan for a second residential property no longer necessitates any deposit. For third and subsequent residential properties, a 10% deposit is required.
These alterations were prompted by recent shifts in economic conditions and the Namibian property market. In response, banking institutions are now required to establish comprehensive policies and procedures to ensure compliance with the loan-to-value restrictions outlined in the new regulations.
Leonie Dunn, Deputy Governor of the Bank of Namibia, highlighted the advantages of the new regulations for property owners and potential buyers.
“These regulations reflect recent economic conditions, necessitating further relaxation while maintaining financial stability. They are designed to encourage investment in the property sector, create job opportunities, and contribute positively to economic growth and recovery,” she concluded.
