Govt targets home loans, but economists say house prices are the problem

Economist Omu Kakujaha-Matundu says the government should focus on reducing house prices rather than blaming banks for long mortgage repayment periods.

His comments follow concerns raised by prime minister Elijah Ngurare about the lengthy repayment period of home loans in Namibia.

Mortgage repayment periods typically range from 20 to 30 years.

Kakujaha-Matundu says long repayment periods are often the result of high house prices rather than banking regulations.

He says many first-time home buyers cannot afford monthly repayments on expensive houses if loans are structured over shorter periods.

“If a house costs N$2 million, an ordinary person cannot afford the monthly installments over a short period. The longer repayment period makes the house affordable, even though it increases the total amount paid over time,” he says.

Kakujaha-Matundu says borrowers are not forced to keep a mortgage for the full loan term and can settle their loans earlier if they have the means.