Saturday Dec 14, 2024
Saturday Dec 14, 2024
Monday, 3 January 2022 00:24 - - {{hitsCtrl.values.hits}}
The Central Bank of Sri Lanka (CBSL) has issued a new directive on the maximum interest rates on mortgage-backed housing loans by banks.
For mortgage-backed housing loans of salaried employees, the applicable maximum interest rates will be the fixed monthly Average Weighted Prime Lending Rate (AWPR) prevailing at the date of disbursement of the loan for the five years of the loan tenure.
After the first five years, the applicable interest rate will be a floating interest rate linked to the monthly AWPR plus 200 basis points for the remaining tenure of the loan and will be re-priced every six months.
The monthly loan instalment for the first years will be computed considering the AWPR prevailing at the date of disbursement as the interest rate for the entire tenure of the loan.
CBSL said the move, effective 1 January, was after considering the current and expected macroeconomic developments and the prevailing interest rates of Rupee-denominated loans and advances granted by banks.
Average Weighted Prime Lending Rate (AWPR) last week amounted to 8.61% as against 5.8% a year ago.
Previously from December 2020, the interest during the first five years was fixed at a rate of 7% per annum. The interest during the period after the first five years varied based on the AWPR as the applicable rate is AWPR plus 1% per annum.
For the 2020 December revision, the CBSL cited reasons as the then reduction in policy rates, the significant levels of excess liquidity and the need for a continued downward adjustment in lending rates to revive the economy. The move was also expected to support the expansion of homeownership and provide an additional stimulus to the domestic construction sector and its supply chains.
In the second quarter of 2021, the Greater Colombo Housing Approvals Index rose by 52% to 61.9 points year-on-year, though the first quarter saw a higher gain of 60.6% in the first quarter.
