Homeowners and buyers have been advised to prepare themselves for another interest rate hike.
The Monetary Policy Committee (MPC) is set to meet in July, with experts advising that all signs point to yet another interest rate hike.
Regional director and chief executive of RE/MAX Southern Africa, Adrian Goslett, said existing homeowners and buyers should check what their repayments would be at various interest rate levels.
They can do so by using the repayment calculator on BetterBond’s website.
Goslett said the repayments on a R1-million home loan taken over 20 years was expected to grow by more than R1 000 if the interest rate were to reach pre-pandemic levels of around 10%.
As the amount grows, the higher the loan amount will be.
For example, on a R2-million home loan taken over 20 years, the repayment amount could grow by over R2 000.
“Equipped with this knowledge, existing homeowners can work out where to cut back to afford the higher repayments.
“In any commission-based career, it is advisable to have cash reserves to get you through the slower months. Regardless of the external circumstances, it is always good to ensure that you carry six month cash reserves. If you’re not there yet, then I would strongly recommend that you start building towards it,” he said.
Goslett added that landlords who were still paying off a home loan on the rental property might also decide to increase the rental amount to make up for the higher bond repayments.
Tenants were therefore advised to leave room in their budgets for rental escalations over the coming months.