What Homeowners and Potential Buyers Need to Know About a Possible Rate Cut and How to Maintain Financial Health

With the repo rate currently sitting at 6.75%, homeowners and potential buyers may be wondering if this rate will change soon and how that might affect their finances. While the Bank of Namibia (BoN) has kept the rate unchanged for now, there is speculation that the rate may drop in the coming weeks. Whether the rate decreases or not, maintaining financial health remains crucial for homeowners and those looking to buy property.

The repo rate and why it matters

The repo rate is the rate at which commercial banks borrow money from the central bank, and it directly influences the interest rates on loans, including home loans. A lower repo rate typically leads to lower borrowing costs, which could mean reduced monthly mortgage payments for homeowners and more affordable home loans for potential buyers.

As it stands, the Bank of Namibia has kept the rate steady in its June 2025 meeting, citing the importance of maintaining the currency peg with the South African rand and mitigating global risks like inflationary pressures. Despite this stability, there is a possibility that the rate could drop in the future, with inflation easing and economic conditions stabilising. However, even if the BoN does lower the rate, it’s essential to be prepared and financially healthy.

What could a rate drop mean for homeowners and buyers?

For homeowners with existing home loans

A potential rate cut could lower monthly home loan payments for homeowners with variable-rate loans, offering some relief. However, it's important to consider that any rate change may be gradual, and lower payments could be offset by inflationary pressures and rising costs of living in other areas, like food and housing.

For homeowners with fixed-rate mortgages, a rate drop won’t immediately impact monthly payments, but it could create an opportunity for future refinancing, especially if interest rates continue to drop over time.

For potential buyers:

A drop in the repo rate could make home loans more affordable for potential buyers, allowing them to secure lower interest rates and potentially higher loan amounts. This would be an opportunity for those looking to enter the property market to find more favorable financing options. However, prospective buyers should also consider that interest rates could rise again in the future. It's crucial to assess your budget and ensure that you can comfortably handle any future rate changes.

How to prepare for changing interest rates

Whether the rate drops or not, maintaining your financial health is key. Here’s how you can stay financially resilient:

Review your home loan options:

If rates are expected to drop, it might be a good time to look at refinancing options or even switch to a fixed-rate mortgage. Refinancing can help you lock in a lower rate and reduce your monthly repayments, giving you more financial flexibility. However, if you are comfortable with your current rate, it might make sense to stay put.

Do not refinance your home loan without speaking to a home loan expert or financial advisor; this will ensure that you are making the best possible choice for your financial health.

Maintain a healthy financial buffer:

Economic conditions are unpredictable, and while lower rates might offer some relief now, it’s always wise to have a financial buffer. Build up an emergency fund, reduce high-interest debt, and make sure your budget accounts for all potential expenses—both predictable and unexpected.

Keep an eye on inflation:

Inflation has been creeping up, with core inflation reaching 4.2% in June 2025. While a rate cut may ease some pressures, the rising costs of food, transport, and housing are expected to continue. Keep track of inflation trends, adjust your budget accordingly, and make sure you’re ready for price hikes in essential services.

Strengthen your credit score:

A good credit score can make all the difference when applying for a home loan, whether interest rates are high or low. By ensuring your credit score stays strong, you’ll be in a better position to secure competitive rates, especially if the repo rate continues to drop and lenders become more flexible.

Need more information on how to maintain a healthy credit score? We've got you covered with our guide on maintaining a good credit score

Diversify your financial portfolio:

With fluctuating rates and global uncertainty, having a well-rounded financial portfolio is essential. While property remains a solid investment, consider diversifying into savings, investments, or other assets that can offer more stability if the economy shifts again.

Monitor the property market:

The property market can be impacted by changes in interest rates. If the BoN reduces the repo rate, it could stimulate buyer activity, especially in the housing sector. Keep an eye on market trends and economic indicators to make informed decisions about buying or selling property.

Connect with a knowledgeable real estate agent in your area to help you understand the market and what your next steps should be to achieve your property goals.

Staying financially healthy amid economic shifts

While a drop in the repo rate could potentially ease financial pressures for homeowners and buyers, it’s crucial to remember that rates may not stay low indefinitely. The global economic landscape remains unpredictable, with factors like inflation, geopolitical risks, and fluctuating market conditions all influencing future monetary policy.

By focusing on sound financial management, building a solid savings buffer, and preparing for potential future rate increases, you’ll be better equipped to navigate whatever changes come your way. Regardless of what happens with the repo rate, maintaining financial health should always be a priority.