select
|

Budget better with fixed-rate loans

Lower-income families and those on fixed pensions should now seriously consider fixing the interest rate on their home loans.
 
That’s the advice of Rudi Botha, CEO of leading mortgage originator Betterbond, who notes that while most banks will charge a higher rate on fixed-interest loans, these do enable borrowers to budget with more certainty.
 
“And this is especially important for certain consumers, such as those living on a set income, first-time buyers and lower-income families, who don’t have the flexibility in their household budgets to be able to absorb a series of increases in their home loan repayments when interest rates start to rise.
 
The reason for his concern at this time, he says, is that many economists are currently revising their earlier predictions that interest rates would not start rising again until next year, and forecasting that the first increases could take place in the last quarter of 2011.
 
What is more, the next round of increases is expected to take prime and variable mortgage rates from the current 9% to at least 11,5% in 2012.
 
The main drivers of rising interest rates, Both says, will be rising oil prices because of the internal conflicts in many oil-producing countries, and rising food prices because of the natural disasters such as floods and droughts that have cut production in many parts of the world, including SA.  
 
“Indeed, in its latest Financial Stability Review, the Reserve Bank says these two supply-shock factors are already affecting the economic and inflation outlook in many countries that import oil and food, and that a higher inflation outlook could soon necessitate ‘monetary tightening’ – or higher interest rates.
 
“But rather than wait for the axe to fall, vulnerable borrowers should fix their rates now. They will pay a premium, but it is likely to be less pf premium than when rates are already on the rise.”
 
 
ISSUED BY BETTERBOND


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 22 Jun 2018
      The rental market in many Johannesburg suburbs has shown encouraging signs of revival this year but it remains a competitive market and landlords who best cater to their market’s needs will reap the healthiest returns.
    • 22 Jun 2018
      Home design is constantly evolving to reflect the changing needs of society. We look at some of the ways in which our use of space is changing.
    • 22 Jun 2018
      While estate agents can help the seller with correctly pricing the property and marketing a property to the right pool of potential buyers, at the end of the day it’s the impression that the property will make on buyers that counts the most.
    • 21 Jun 2018
      Anyone who’s ever been involved in a building project that’s gone wrong will appreciate the importance of adequate insurance cover in the construction industry.
    • 21 Jun 2018
      A recent news story about a blind tenant caught in a legal battle with his body corporate over letters and notices he was unable to read and consequently comply with has raised the question: what are the legal obligations for landlords with disabled tenants?
    • 21 Jun 2018
      A trend that’s taken the world by storm in recent years is that of hygge (pronounced: hue-guh), a Danish concept that is about creating intimacy, connecting with loved ones and taking pleasure in small, ordinary things.
    • 20 Jun 2018
      Buying or selling real estate isn’t as easy as it is portrayed sometimes, especially if there is a death of a party during the transaction which can make it awkward, tricky and inconvenient.
    • 20 Jun 2018
      With interest rates remaining at historic lows and banks continuing to compete for mortgage finance business, first-time buyers with funds at their disposal are currently well-placed to gain that initial foothold on the property ladder, particularly in the light of the slightly lower growth rates currently experienced in residential property values.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK