With the interest rate rising for the third – and likely not final – time in a row last month in March, it’s no surprise that many South African homeowners are looking for creative ways to minimise the impact on their bond repayments.
The option to negotiate a fixed interest rate can be tempting in times like these. However, Roger Lotz, franchisee for Rawson Properties Helderberg, cautions homeowners to think carefully before taking this potentially costly route.
“Increasing interest rates is the SARB’s primary method for containing rising inflation, but inflation isn’t the only economic ball they’re juggling right now,” said Lotz. “The pandemic left our economy in crisis, and reigniting growth is of the utmost importance. Increasing interest rates too high, too fast, would be detrimental to that goal. A slow and steady rise to moderate – not extreme – levels is far more likely.
Fixed interest rates can be beneficial in certain circumstances where reliability and predictability are more valuable than overall cost. When affordability is your ultimate goal, however, Lotz said fixed interest rates are almost never the answer.
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