Article of Interest - Now still a Good Time to Apply for a Home Loan
It is now quite clear that, following a small 0.25% interest rate rise in the prime rate last month (November 2015), raising the prime bank rate to 9.75% per annum, the South African Reserve Bank will increase its rate further during the course of 2016 and 2017.
“All our experience goes to show that there are hundreds, perhaps thousands, of South Africans out there who long to become homeowners but who are deterred from buying simply because they do not understand the process and the criteria which the banks apply home loan awards,” says Smyth.
This is according to John Smyth, CEO of Multi Net Mortgages, national bond originator, who says it is now also clear that the South African Reserve Bank has made it a priority to curb inflation, which they predict will rise to 6% in 2016.
“By acting as they have now they are softening the impact of interest rate rises, which will inevitably follow on from the rises which the US Federal Bank will implement in the very near future,” he says.
In these circumstances, what advice can bond originators give potential bond applicants?
“My advice is to get in as soon as possible before further rises take place. Start budgeting accurately, consult a good bond originator throughout the entire process and, once your ducks are in a row, apply for a home loan before further rises in the interest rate take place.”
Smyth says that although it is true that the average middle class South African has in the last 24 months seen his net disposable income reduced very markedly by the rising cost of living, it has also to be accepted that South African interest rates are still very close to the lows of 2013 and should, therefore, be within reach of any middle class salary earner who budgets carefully.
“All our experience goes to show that there are hundreds, perhaps thousands, of South Africans out there who long to become homeowners but who are deterred from buying simply because they do not understand the process and the criteria which the banks apply home loan awards,” says Smyth.
“An education programme is vitally necessary, but consulting with a reputable originator can make all the difference.”
Source: Charlotte Butler/Copestone Financial Solutions