Regulatory Alerts2020-12-22 | Frequently Asked Questions No. 5 of 2020Maximum Interest Rates on Mortgage-backed Housing Loans
The Central Bank of Sri Lanka issued Order No. 3 of 2020 to cap interest rates on mortgage-backed housing loans for salaried public and private sector employees. The regulation mandates a fixed 7% annual interest rate for the first five years, followed by a variable rate calculated as the Average Weighted Prime Lending Rate plus 1%, with repayments extending until the borrower’s expected retirement. Loans must be secured by a primary mortgage over the same property used for purchasing, constructing, or renovating residential housing, and borrowers may settle them without pre-settlement penalties if paid in full at the end of the fixed-rate period.
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