Homeowners must hang on tight as SA reaches top of interest rate rollercoaster

Once the repo rate starts to come down, so will repayments on loans with variable interest rates. Picture: Tayla Kohler/Unsplash

Once the repo rate starts to come down, so will repayments on loans with variable interest rates. Picture: Tayla Kohler/Unsplash

Published Jan 16, 2024


Property owners and buyers must be mindful of their expenses this year as interest rates look set to remain high and livings costs are expected to keep climbing.

Homeowners who are struggling to keep up with their bond repayments are also urged to reach out to their banks as soon as possible.

While economists and property experts predict that the interest rate will hold steady at 11.75 percent at the end of January, and possibly start to come down later in the year, consumers should not expect much reprieve any time soon.

In fact, Seeff Property Group chairman Samuel Seeff says 2024 is likely to continue seeing a rise in the cost of living with the Finance Minister’s Budget set to bring more cost implications for consumers.

“While the interest rate outlook appears more positive compared to last year, the economic growth prospects remain at the lower end of the curve. Prospective property buyers will therefore need to remain mindful of the pressure on affordability. They should budget carefully and rather buy below their means to ensure they have a financial buffer.”

Given that South Africa is probably at the top of the repo rate cycle, Angela Glover, head of product at FNB Home and Structured Lending Solutions, encourages homeowners to keep up with their bond repayments and not fall into arrears. Once repo rates start to come down, repayments on home loans with variable interest rates will also come down. This will offer some relief.

“Remember to reach out to your bank if you find yourself unable to meet your payment commitments.”

She adds: “Potential homebuyers may want to consider the outlook that rates are not expected to increase in the short term, and so if they buy a home now their repayments will likely remain flat and then decrease as rate cuts are effected.”

In this current market, affordability is a “hugely important” consideration, agrees Bradd Bendall, head of sales at BetterBond. Buyers should budget with care and be sure to include all the costs of home buying, not only their monthly home loan repayments.

Existing homeowners are encouraged to remain mindful of their household expenses.

“We all know that January can be a very long month after multiple festive expenses. If you think you may run into financial difficulty, or you are struggling right now, speak to your home loan provider without delay and make an arrangement that gives you some relief.”

With interest rates expected to start coming down later this year, Paul Stevens, chief executive of Just Property, believes that now is a “very good time” for aspiring buyers to step onto the property ladder.

“We are in a buyer's market so it is a good time for those buyers with the available funds and financing to search for a property that suits their needs.”

Adrian Goslett, regional director and chief executive of RE/MAX of Southern Africa, advises homeowners to keep their debt levels as low as possible, especially on debts with higher interest rates. These include personal loans and car loans.

“Funnel whatever spare cash you have towards paying off those debts first and avoid taking on any new debts if possible.”

Those who are selling within the current market need to keep in mind that qualified buyers are harder to come by within these economic circumstances, he adds. That being said, well-priced homes marketed by good real estate professionals should have no problem selling.

Echoing this, Seeff says sellers must keep their price expectations conservative as there is unlikely to be any notable uptick in price growth in the early part of this year.

“That said, prices have remained steady and we are not foreseeing any shocks for the market right now.”

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