CBSL caps interest rates on mortgaged-backed housing loans

COLOMBO (News1st): The Central Bank of Sri Lanka has imposed maximum interest rates on mortgaged-backed housing loans obtained by salaried employees in the public and private sectors, from licensed commercial banks and licensed specialized banks. The order issued on December 4, 2020, under the Monetary Law Act Order No.03 of 2020, is expected to support the expansion of home ownership of the Sri Lankan general public, and provide an additional stimulus to the domestic construction sector and its supply chains. The applicable interest rates specified under the order shall be a fixed interest rate of 7 percent per annum at least for the first five years of the loan tenure. Accordingly, a floating interest rate linked to the monthly AWPR plus a maximum margin of 1 percent for the remaining tenure of the loan will be charged. The order will apply to housing loans secured by primary mortgages over the same property and purchasing of condominium property based on an arrangement acceptable to licensed banks which must be converted into a primary mortgage over the property when construction is completed.