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Homeowners brace yourself- high interest rates may be here for some time

"Interest rates to stay higher for longer" "Interest rates go from bad to worse". These are some of the headlines we are seeing in South Africa since the latest announcement from the South African Reserve Bank's (SARB) Monetary Policy Committee (MPC) to keep the interest rates the same. In short, if you've been looking forward to an interest rate cut this year (2024), you may want to realistically adjust your expectations. 

During COVID-19, we experienced the lowest interest rates in years. With that, people who were previously excluded or could not afford their dream home entered the property market. 

Since COVID-19, we have experienced consecutive rate hikes. And while raised rates, positively affect saving interest rates, it negatively impacts home loans and car loans. Currently, South Africans are facing the highest interest rates in 15 years, even before the pandemic. As a result, many consumers are currently unable to afford their homes. 

The impact of higher interest rates

High interest rates affects all of us. According to research conducted by Lightstone in 2023, the amount of people who sold their home within two years of purchasing it, increased from 2% in May 2021 to 3.7% in May 2022. 80% of people who bought homes when interest rates were low in May 2021, were sellers by May 2023. 

This suggests two things:

  • People definitely took advantage of the low interest rates during COVID. 
  • Raising interest rates has meant that people can no longer afford to keep their properties that they bought at the time of record-low interest rates.

Additionally, higher interest rates can also impact the overall housing market. As more homeowners are forced to sell their properties, there may be an increase in supply which can lead to a decrease in property values. This can be concerning for homeowners who may find themselves in a situation where they owe more on their bond than their home is worth.

Interest rate predictions for 2024

For the fortunate people who were able to keep their homes even during soaring interest rates, they may have looked forward to interest rate cuts in 2024. If this is you, it seems there is some bad news that may be ahead. Some economists are suggesting that these cuts may either only take place in the latter part of the year (September) or not even at all. 

According to an article published by BusinessTech, the best situation for South Africa could see two 25 BPS cuts in September or a 50 BPS cut in November. And in a worse case (realistic) scenario, consumers can expect an interest rate cut only in the middle of 2025. 

What can you do if you are struggling to keep up with your home loan repayments?

If you are currently struggling and unsure about how you will afford your upcoming loan repayments, do NOT wait. The best thing you can do is act now. 

The best solution for you is to go under debt review at Meerkat. Debt counselling is a legal debt relief programme that helps consumers unable to keep with their debt repayments.

Not being able to keep up with your debt repayments or these ridiculous interest rates, is not a shame story. As you've read in this article, 80% of people who bought their homes during COVID had to sell again by 2023. This doesn't have to be you. 

At Meerkat, we offer debt review services to help you keep your home and lower your monthly debt repayments. This can provide you with immediate relief without having to wait for interest rates to decrease. 

Contact me about debt review >>

Who is Meerkat?

We are a financial wellness company committed to helping South Africans do MORE with their money. We do this by helping them with debt repayment negotiations, providing affordable insurance and helping you kickstart an emergency fund.

We are also registered as a Debt Counsellor with NCRDC 2613, and we have been voted as one of the Top 10 Large Debt Counsellors in South Africa!

Fill in the contact form on our website to receive a free callback from the Meerkat team today.


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