WINDHOEK: The Bank of Namibia on Wednesday announced that loan-to-value ratios for purchasing multiple homes through mortgage bonds to mitigate financial risks, have been relaxed.
This was made possible through a new regulation issued by the Minister of Finance and Public Enterprises, on the recommendation of BoN, effective 31 October 2023.
The loan-to-value ratio represents the amount of money lent to a borrower by a banking institution to purchase a property in relation to the property’s price or valuation, and the deposit required from the borrower.
BoN Director of Strategic Communication and International Relations, Kazembire Zemburuka said the latest regulations have replaced the previously issued regulations on restrictions to loan-to-value (LTV) ratios in 2019.
“The new regulation provides for a further relaxation of LTV ratios, particularly concerning additional property purchase. As such, a mortgage loan for a second residential property no longer requires any deposit, while mortgage loans for third and subsequent residential properties only require a 10 per cent deposit,” the statement read.
Moreover, recent economic conditions and shifts in the Namibian property market prompted these changes. Banking institutions are mandated to establish comprehensive policies and procedures to ensure adherence to the loan-to-value restrictions outlined in the regulations, he noted.
Appraising the new regulation, BoN Deputy Governor Leonie Dunn emphasised the significant advantages it offers to property owners and prospective property buyers.
“These regulations mirror recent economic conditions which require a further relaxation while safeguarding financial stability. They are designed to foster investment in the property sector, generate job opportunities, and make a positive contribution to economic growth and recovery,” she noted.
Source: The Namibian Press Agency