Buyers need to make a move - carefully

Prospective homebuyers have been given another “breather” when it comes to applying for a home loan – but this week’s decision by the Monetary Policy Committee (MPC) to leave interest rates unchanged should not make them complacent.
That’s the word from Shaun Rademeyer, CEO of SA’s leading mortgage originator BetterBond, who says they should heed repeated warnings from Reserve Bank Governor Gill Marcus that interest rates will have to be raised in the near future to put the brakes on inflation.
“As it is, the Consumer Price Index breached the Bank’s 6% upper target in April, and the Governor noted this week that the rand was still under extreme pressure due to a lack of investor confidence in developing markets generally. This of course has a negative effect on fuel prices and we are now also entering a season of higher food prices and the annual increases in administered prices like electricity tariffs.”
Consequently, he says, those who are planning to enter the property market for the first time, and those who wish to upgrade to a more expensive property, should do so without delay, as even a 0,5% point increase in interest ratescould have a negative effect on their ability to get a home loan approved.
“Every increase of course means higher monthly repayments on things like cars, furniture, credit cards and store accounts which, added to the increases in living costs will leave prospective buyers even less of the disposable income that banks are looking for now when they consider home loan applications.
“At the same time, property prices themselves are currently moving up steadily, thanks to a growing shortage of stock for sale in many popular areas, and prospective borrowers could well find that they don’t qualify for the bigger loans they need once interest rates – and monthly repayments – have gone up.”
However, Rademeyer says, now is also the time for homebuyers to be extremely cautious in their choice of property.“ It is absolutely essential that they allow themselves enough leeway to cope with future rate increases when they do their own affordability calculations – or even better, that they seek help from a reputable bond originator like BetterBond to get home loan pre-approval, so that they will know what their property price range is, with some leeway built in.”
Meanwhile, existing homeowners should be taking every opportunity now to pay down the capital on their home loans, he says, so that their monthly instalments don’t rise too much when interest rates are increased.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 25 Oct 2016
      A contemporary 6 bedroom cluster set in a secure estate in the sought-after Lonehill, Sandton is our Property Pick of the day!
    • 25 Oct 2016
      For a homeowner who has reached retirement age and is looking to purchase a retirement home, there are several aspects to consider, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 25 Oct 2016
      An exclusive new address will soon rise in Cape Town’s fast growing East City District, and units are fast being snapped up by investors in the buy-to-let market.
    • 25 Oct 2016
      As the end of the year approaches, it is often a time for tenants to be on the lookout for a new property to rent. While finding the right home at the right price is usually the main consideration, equally important is to make sure both tenants and landlords understand the insurance implications involved, and who is responsible for what.
    • 24 Oct 2016
      Set on 3.5 acres of sprawling gardens this palatial home in the popular Kyalami, Midrand offers the ultimate in luxurious living.
    • 24 Oct 2016
      The suburb of Wynberg was originally farming land belonging to one of the freeburgers that supplied the Dutch East India Company. In 1682 the land was sold to Herman Weeckens, who named the farm De Oude Wijnbergh. With the Cape’s seas growing far rougher during the winter months, ships would lay anchor at Simon’s Baai, which would later be called Simon’s Town. Sailors would then travel via wagon route from Simon’s Town to Cape Town, passing through De Oude Wijnbergh estate.
    • 24 Oct 2016
      Despite our volatile political landscape and the uncertainty of the Rand, investors are still present and keen to buy property. “Investors are seeing the value in placing their money in bricks and mortar in areas with a rising market, which may be seen as a more stable investment than putting money offshore or into other asset classes,” says Harold Kolnik of Jawitz Properties South Peninsula.
    • 24 Oct 2016
      Mixed use developments are no longer an emergent trend in Cape Town; they have become a firmly established feature of the city’s architectural landscape, especially in the CBD where two more developments are already in the planning stage and five new proposals are currently on the drawing board.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us