I think, from an economist point of view, that a situation like 1998 will be obtained a lot quicker this time round, i.e at lower interest rates than then. My reasoning is simply that mortgages in the late nineties were based on relatively affordable prices at the onset - at least between the lower and middle scale of affordability. Today, however, mortgages are based on the upper end of affordability - people generally bought the most expensive homes in their price bracket in terms of their perceived affordability - whereas in real terms the margin from being able to afford to being in ***** street is literally only an interest rate hike or two away for many new home owners.
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Can you pay your bond?
- Thread starter Pixual
- Start date
Apologies, I posted my response in a very pissed state this morning and just felt like being argumentative based on a prevous thread that annoyed me. Most of my response is BS and I am happy to say it. Drunken BS!
Albereth
Honorary Master
Basically he repo rate is the rate at which the central bank provides money to the commercial banks (strictly the discount rate at which it repurchases government securities). In order for the commercial bank to make money it 'sells' its money to customers at a higher price than it borrowed it. This is the interest rate that was mentioned.
ToxicBunny
Oi! Leave me out of this...
Its an older post, but I tend to agree with Bobbymacs sentiments of property being ridiculously overvalued at the moment. The fact that I'm earning the salary I am, and not able to even afford a basic starter home is evidence of that.
Pixual
Expert Member
Toxic, you and I are in the same boat. The only pain with renting is putting up with the landlords fickle nature. I told mine last year that if she wanted to up the rent by 10% I wanted 10% more house. I got what I wanted. 
diebaas
Senior Member
Thats the truth how many starter families cant afford to purchase a house.
Houseprices skyrocketed recently,so did everything else.
What will happen in the coming years, is strikes for higher pay.
The salaries will have to be adjusted upwards,with resulting increases in inflation.
Be prepared for labour unrest soon.
Do not worry, in a few years you will be able to afford a house again.
This might happen sooner than you think.
If enough people emmigrate,you might find bargains soon.
diebaas
Senior Member
Still its not just the emigration that might lead to you getting a bargain, but how many people will start losing their houses as result of the rising costs.
Unfortunately this is true.
You see,this is all a big conspiracy by the banks.
Banks know that when they make credit freely available, people will overextend themselves.
Then ,in order to prevent rising inflation,the interest rate goes up.
Suddenly you cannot afford to pay your car ,house or service your credit card.
The banks then reposesses your stuff, and sell it for whatever.
You are still liable to pay the difference; the banks do not lose anything.
The bank is not your friend.
diebaas
Senior Member
I think we are all aware that they are not there to help you but to get richer.
It like the one guy said:
''The rich will get richer and poor will get poorer"
Banks operate on the greed principle.
They use people's greed against them.
And they then have you by the short and curly.
diebaas
Senior Member
Though I agree that the bank is not our friend. If we are not able to service our debt is not in their best interest either.
When they actually auction off you stuff, it is usually at a loss to what you owe them. When I bought my car recently I asked the consultant to work out my payments at 18% and she looked at me as I was crazy. I just wanted to know that 2-3 yrs from now I would still be able to afford the thing. That presuming that rates keep going upwards.
Though I agree that the bank is not our friend. If we are not able to service our debt is not in their best interest either.
When they actually auction off you stuff, it is usually at a loss to what you owe them. When I bought my car recently I asked the consultant to work out my payments at 18% and she looked at me as I was crazy. I just wanted to know that 2-3 yrs from now I would still be able to afford the thing. That presuming that rates keep going upwards.
Agreed.
When they auction your stuff it normally is at a loss.
You are still liable to pay the bank the difference between what your stuff got sold for at the auction and what you still owe the bank.
The bank will come after you and attach your salary,unless you file for bancrupcy,or go under administration,in wich case the magistrate decides how much of your salary you may keep to live off.
this is not the usual case on a bond.... the banks auction off the house and thats it. The banks have one shot to recover as much as they can. Its too costly to try recover small amounts... if your house is gone, it usually means you are totally broke and the risk is too high to get blood out of a stone.
A car debt is another story....
diebaas
Senior Member
If you apply at the court house for rehablitation it would be much shorter.
The only k@k thing is your credit record will be looking really crappy and the banks will most likely say you are a high risk, but there will always be one bank that will eventually give you a loan.
Ozymandias
Senior Member
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A question I would like to ask the experts - when your home is repossessed, is the bank only obligated to recover the outstanding home loan at auction or does that obligation also extend to the equity? Say I buy a home for R1-million of which R500,000 is my own money and the rest is a loan from the bank. At auction, is the bank acting as my agent to get the best price to recover my own investment in the property and not just its own?