With interest rates likely to rise over the next few years, homeowners who haven’t looked over their bond commitments should do so, advise property experts Paul Stevens and Carl Coetzee.
The Monetary Policy Committee decided Thursday , to increase the repo rate by 25 basis points to 4.25%, marking the third consecutive 25 basis point increase since the low of 3.5%. The decision was split among the MPC members with three members preferring the 25 basis point increase and two motivating that a 50 basis point increase would be more appropriate.
“Generally, a fixed interest rate is higher than a variable rate as it poses more of a risk to the bank. It is only negotiated at the time of bond registration and the rate offered is dependent on the going rate at that specific time,” said Coetzee.
Buyers’ needs have also changed and we are seeing more people semigrating to the coast or smaller towns where they can work remotely and enjoy a better quality of life. This trend is expected to bolster buyer activity over the next few months notwithstanding the gradual rise in interest rates, he added.
Just Property said that obtaining pre-approval if you are thinking of applying for a bond is always a good idea. It not only gives you a good idea of what you can afford, based on your household expenses, available deposit etc, but it also greatly improves your chances of bond approval when you do find your ideal home.
“South African consumers are already under intense pressure, and costs of living are only getting worse with record-breaking fuel price hikes on the horizon,” he says. “I think the SARB is very aware of the fact that adding too much pressure too quickly could be the final straw for our embattled economy. I think we may see the prime lending rate increasing incrementally to reach around 8.5% at most by the end of the year. Any more than that is, in my opinion, unlikely.
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Working out your bond calculations in South Africa: how much you pay right nowWith interest rates likely to rise over the next few years, homeowners who haven’t looked over their bond commitments should do so, advise property experts Paul Stevens and Carl Coetzee.
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