Interest rate hike expected this week

randomcat said:
It's sad but a predict some bargains on houses might be coming up in 2-4 years
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TBH, I doubt it..

If rates hike up significantly, I would expect to see a stagnation of price growth in houses more than anything else.

But even with 2 or 3 25 basis point hikes, the interest rate is still relatively low for this country historically, so its still a "good" time to buy property, but you should just build in a buffer in affordability to handle the rate hikes.
 
ToxicBunny said:
but you should just build in a buffer in affordability to handle the rate hikes.
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Agreed, it is normally the buyer who purchases a vehicle or house, close to their affordability and then lose it all when rates hike aggresively. If you do build a buffer that could carry those increased premiums for a while, you should be okay.
 
ToxicBunny said:
TBH, I doubt it..

If rates hike up significantly, I would expect to see a stagnation of price growth in houses more than anything else.

But even with 2 or 3 25 basis point hikes, the interest rate is still relatively low for this country historically, so its still a "good" time to buy property, but you should just build in a buffer in affordability to handle the rate hikes.
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It might be a bit late but the "correction" in the market has to happen.

rvZA said:
Agreed, it is normally the buyer who purchases a vehicle or house, close to their affordability and then lose it all when rates hike aggresively. If you do build a buffer that could carry those increased premiums for a while, you should be okay.
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Yes but how many people did that.
 
randomcat said:
Yes but how many people did that.
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Unfortunately, as historically proven, not many people walk into the bank with that in mind... "what happens if they increase interest rates tomorrow? By how much will my monthly premium increase? Will I be able to afford it?"

So yeah, that is unfortunately how things work. People do lose vehicles and homes with these increases, no matter how small or big the increases are.
 
randomcat said:
It might be a bit late but the "correction" in the market has to happen.


Yes but how many people did that.
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What sort of correction are you thinking of though?

Our property is actually still relatively cheap if benchmarked internationally.

Yes it is out of the reach of many SA people but property is a tricky one trying to benchmark it entirely locally to a country, since there is international interest at various levels which will push prices around a bit.
 
ToxicBunny said:
TBH, I doubt it..

If rates hike up significantly, I would expect to see a stagnation of price growth in houses more than anything else.

But even with 2 or 3 25 basis point hikes, the interest rate is still relatively low for this country historically, so its still a "good" time to buy property, but you should just build in a buffer in affordability to handle the rate hikes.
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I'm looking at buying, but I calculate on 10%. So I know I will comfortably afford it, as well as push more into the loan. What is depressing is seeing some of the complex or estate levies.
 
BBSA said:
Good, I can do with some extra income.
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Yeah, hoping the banks will follow swiftly in increasing the saving account rates. Need the few extra Rands....
 
rvZA said:
Bad for investments. Bad for any type of debt - home loans, credit cards, personal loans, clothing accounts, etc. Investors tend not to invest longterm where inflation is out of control and interest rate hikes are needed and flee for safer havens, like what is happening in the US markets now. All debt you have becomes more expensive.

Good for those with money in their interest bearing saving accounts.
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And for ppl wanting to sell property?
 
randomcat said:
It's sad but a predict some bargains on houses might be coming up in 2-4 years
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I think it depends on the area.

Around my parts (Garden Route) building is now around R18 000-22 000 per sqm and I don't see it coming down.
It's cheaper to buy an existing house at the moment if you can find one. Anything remotely affordable sold during the last 2 years (Under R3m) . Only total junk and mega mansions left, so people are building new homes. but those come it at R4M for a 200sqm home, without the land.
 
STORMERSFAN said:
And for ppl wanting to sell property?
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How will an interest rate hike or decline benefit a seller?

I can see it either benefitting or shooting the buyer in the foot. The one who applies for a bond and needs to pay it off over 20 years, unless he or she signed a fixed interest rate agreement.

On the other hand, interest rate hikes may make many buyers nervous and some may even hold off on purchasing if they are not sure what will happen. Some may wait a few months to see. Currently, with markets being nervous and the previous rate hike not stemming inflation, we could likely expect even more rate hikes this year. It will definitely have an effect on the sellers market. But, as mentioned by @ToxicBunny, interest rates are actually quite low and now may be a good time as ever to buy a house and enter into a fixed interest rate bond.
 
Eish. Going to be kakking a bit.
Single income household at the moment and bought a house last year. There is a buffer at the moment but if it goes through the roof we will need to make some adjustments.
 
Brawler said:
Eish. Going to be kakking a bit.
Single income household at the moment and bought a house last year. There is a buffer at the moment but if it goes through the roof we will need to make some adjustments.
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Damn, good luck! I am sure inflation will eat through that buffer, if they are not able to stop it with this increase, faster than the next increase would come. Difficult times ahead for everyone.
 
rvZA said:
Damn, good luck! I am sure inflation will eat through that buffer, if they are not able to stop it with this increase, faster than the next increase would come. Difficult times ahead for everyone.
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Thanks! I'm telling myself the first few years will be the hardest and when my Fiancée gets a job again we will be smiling. I also do have a plan B and C but obviously, those aren't the preferred options.
 
Brawler said:
Thanks! I'm telling myself the first few years will be the hardest and when my Fiancée gets a job again we will be smiling. I also do have a plan B and C but obviously, those aren't the preferred options.
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The first few years are definitely the hardest without a doubt but if you have a buffer to be able to handle around 1.5% increase in the repo rate overall, then you should be good (albeit tight) for a year or two, and by then you can hope your Fiancée has a job again, or you've had some decent increases...

As an aside, If you have a buffer in the amount you can pay for your bond every month, I would honestly suggest paying in that buffer to your bond right now, and keep paying it in... it will lessen the impact of the rate hikes over time.
 
ToxicBunny said:
The first few years are definitely the hardest without a doubt but if you have a buffer to be able to handle around 1.5% increase in the repo rate overall, then you should be good (albeit tight) for a year or two, and by then you can hope your Fiancée has a job again, or you've had some decent increases...

As an aside, If you have a buffer in the amount you can pay for your bond every month, I would honestly suggest paying in that buffer to your bond right now, and keep paying it in... it will lessen the impact of the rate hikes over time.
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Thanks man.
By buffer, I mean every month after everything we still have some $ leftover.
I have a few months' salary in a rainy day fund that I would prefer not to touch.
I do have a chunk of change coming 1st of March which was meant to be for a new kitchen but that might go straight into the bond.
 
Brawler said:
Thanks man.
By buffer, I mean every month after everything we still have some $ leftover.
I have a few months' salary in a rainy day fund that I would prefer not to touch.
I do have a chunk of change coming 1st of March which was meant to be for a new kitchen but that might go straight into the bond.
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Yeah, the definition of a buffer varies from person to person :)

But if you have some crown left over at the end of the month after everything, then dump that into the bond (or use it to deplete other high-interest accounts that drain your finances every month so you can dedicate more money to the bond).
I definitely wouldn't touch your rainy day fund at all, that should be sacrosanct (although if you have an access bond, it may be useful to dump it into there but at least keep it segregated in your own head).

Also in terms of renovating or modifying a house you've just bought, my personal suggestion is to live in the space for at least 2 years so you can decide how the spaces best work for you, then you can maximise the effectiveness of the renovations.
 
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