Added interest: Advice for homeowners

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MOSSEL BAY NEWS - "Interest rates are expected to rise gradually to 2024, so prospective bondholders should look at what they can afford beyond the current interest rates", says Paul Stevens, CEO of Just Property. Industry predictions suggest three or four hikes in 2022, “possibly to as high as 5%”, with the repo rate expected to return to its pre-pandemic (end-2019) level of 6.50% by the close of 2024.

Stevens and Carl Coetzee, CEO of BetterBond, addressed some of the frequently asked questions they’re hearing from bondholders and prospective homeowners.

Should you fix your rate now?

“Home loans are awarded by default on the basis of a variable interest rate. Once your bond has been registered, you can apply for a fixed interest rate and there is a strict time limit attached before the offer lapses,” notes Coetzee.

“While market conditions are always a useful guide, the most important factor when deciding on whether to fix the interest rate or not should be affordability.”...

THE 2022 SOUTH AFRICAN PROPERTY FORECAST

Paul Stevens, CEO of Just Property, looks ahead to 2022 and finds real reasons for optimism. Here, he shares his thoughts.

Rising interest rates: not as scary as it sounds

We are expecting to see marginal interest rate increases during the course of 2022, and economists are predicting that we will not see pre-Covid interest rates for several years. This leaves a favourable environment for buyers and property investors alike.

Context is important when considering the impact of increases in interest rates on people’s appetite for buying. It’s not as scary as some may think or make it out to be: the increase of the repo rate by 25 basis points brings the base home loan interest rate to 7.25%. In practical terms, that means an extra monthly cost of R151 on an R1m bond and an extra R452 per month on a R3m bond. Due to this increase, we are expecting the sales market we have been trading in to start to slow down.

People need a place to stay, and as long as bond repayments are similar to rental costs, the property sales market will remain buoyant. There is also an emerging middle class, particularly in cities like Johannesburg and Pretoria, combined with a desire to leave a legacy that serves the property sales market well.

As long as clients are showing that affordability is there, the banks will be willing to lend even with further possible rate increases in the coming year. That said, there does appear to be a slow down of bank approvals.

Modern 4 Bedroom house with 3 bedroom apartment

Exclusive dual mandate.

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This modern low maintenance home can easily be converted into a guest house or you can with small changes create 2 more apartments for a monthly income not counting the existing apartment with its own entrance.

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The gas hob for those unwanted load-shedding days.

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