While homeowners should brace themselves for a possible interest rate hike this week, the property market is still in far better shape than it was in 2008 when the property bubble burst and house prices plunged, says Carl Coetzee, chief executive officer of bond originator, BetterBond.
“With economists predicting that the repo rate could increase by as much as 50 basis points on Thursday, taking the prime lending rate to 8.25%, it’s understandable that homeowners are concerned about the impact this will have on their bond repayments,” said Coetzee.
By way of explanation, the monthly repayments on a R2 million bond in 2008, at the height of the property market’s implosion when the prime lending rate was at 15.5%, was just over R27,000, said BetterBond. Furthermore, he said that the recent increase in interest rates has not dampened the banks’ appetite to lend. “BetterBond has seen an almost 10% increase in the ratio of formally granted bonds for April, year-on-year, which is significant coming off the high base set last year,” said Coetzee.
Buyer activity remains strong, especially in the middle-priced segments, said Coetzee. RE/MAX reports that in real terms , sales values for 2021 grew by 60.9% compared with 2008.
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