Contact Us
  
Friday Jan 31, 2014

Bond repayments set to keep rising

Property owners will have to brace themselves for higher monthly mortgage bond repayments, with analysts forecasting that Wednesday's decision by the Reserve Bank to increase the repo rate by 50 basis points could be the first of several rate hikes this year.

The major banks have increased their prime home loan rates by 0.5 percentage points to 9 percent. This will result in monthly repayments on 20-year mortgages rising by R96 a month on a R300 000 loan, R160 on a R500 000 loan, R319 on a R1 million loan and R638 on a R2m loan.

Ian Watson, the chief executive of debt counselling company DebtBusters, expected the rate hike to result in a 'large spike in defaults on the banks' home loan books in the months ahead'.

Over-indebted consumers were already faced with price hikes in electricity, rates and petrol but many of them were also overloaded with unsecured debt, which might be the final straw for many of them, Watson added.

John Loos, a household and property sector analyst at FNB, dismissed this alarmist view, stressing it was difficult to see a 0.5 percentage point increase in home loan rates having such a big impact.

Jacques du Toit, a property analyst at Absa Home Loans, said that the rates hike would not have a major impact on the home loan books of banks and only a moderate impact on the consumer and broader economy. However, Du Toit said there was a risk of further rate hikes. 

Business Report

    
 

Previous Articles *

Search News

Property Searches:

Browse Property For Sale

© 2020 Independent Online Property Joint Venture (Pty) Ltd. All rights reserved.
Reliance on any information this site contains is at your own risk. Please read our Terms and Conditions of Use and Privacy Policy.