Mboweni moots fixed mortgage rate

[BTTB]

Mboweni moots fixed mortgage rate
I think this idea has merit.

With the tougher Credit Laws coming in next year I think this suggestion if implemented may be a welcome relief for existing and new potential home owners.
The threat of interests going overboard like we had in 1998/9 is always a concern to a home owner. To me it is. After 1998 I vowed never to trust the Reserve Bank with it's interest rates, but as time moves on one tends to "forget" those events where a Homeowner had to find extra money in their monthly budget, because the Interest Rate had climbed to 25%.

I fail to see how a person that qualifies for a Mortgage is creating debt in our country. Owning a property/home should be almost a Constitutional Right and once a Citizen owns a property he/she should not live in fear of having to pay exorbitant interest rates.

Edit: News24 Report
Separate rate for home loans?

 

[JStrike]

This does seem like a good idea. I still think most of the inflationary pressure is not coming from the banks, but from the retailers offering Account Cards

 

[Syndyre]

Mboweni moots fixed mortgage rate
I think this idea has merit.

With the tougher Credit Laws coming in next year I think this suggestion if implemented may be a welcome relief for existing and new potential home owners.
The threat of interests going overboard like we had in 1998/9 is always a concern to a home owner. To me it is. After 1998 I vowed never to trust the Reserve Bank with it's interest rates, but as time moves on one tends to "forget" those events where a Homeowner had to find extra money in their monthly budget, because the Interest Rate had climbed to 25%.

I fail to see how a person that qualifies for a Mortgage is creating debt in our country. Owning a property/home should be almost a Constitutional Right and once a Citizen owns a property he/she should not live in fear of having to pay exorbitant interest rates.

Edit: News24 Report
Separate rate for home loans?

Some companies already offer fixed interest rates, but seems like a good idea anyway.

 

[icyrus]

This does seem like a good idea. I still think most of the inflationary pressure is not coming from the banks, but from the retailers offering Account Cards

Aren't there tighter regulations coming soon that are meant to address this problem?

 

[noxibox]

Aren't there tighter regulations coming soon that are meant to address this problem?

Yes, and about time. The situation has become insane, with people having credit several times their monthly income.

 

[Syndyre]

True but the companies offering the credit are the ones taking the risk, why should everything be legislated?

 

[fivelza]

This does seem like a good idea. I still think most of the inflationary pressure is not coming from the banks, but from the retailers offering Account Cards

Not true, the mere fact that there is credit available does not impact on inflation, it is when consumers start using it.

 

[BTTB]

Stricter Credit Legislation in the offing.

Aren't there tighter regulations coming soon that are meant to address this problem?

Yes.

One of the problems mentioned by Trevor Manuel is that there are so many new Businesses selling credit.
The uptake of this credit has resulted in the Government wanting to tighten up the legislation regarding the criteria needed to get credit.
The other side I think is the Banks and these new institutions selling credit foresee that the new regulations will limit their business and are issuing credit left, right and centre while they still can.

By the end of next year and the year after that it will normalise and we may even see a decline in credit demand as it will be more difficult to qualify for credit.
At least that is my assessment of the matter. Open to comment as usual.

 

[Syndyre]

When does the new legislation take effect?

 

[stoke]

So then I'll buy everything on my home loan account.
KEWL.

 

[BTTB]

So then I'll buy everything on my home loan account.
KEWL.

I was wondering about that?

If this rate does become a reality it may not include a Access Bond?
I cannot say, but I think the idea of the preferential rate is to enable people to pay off their homes in the allotted 15 or 20 year term of the loan.
Not saying you wouldn't be able to pay off your loan with a Access Bond, but I am sure Mboweni and Co will dream up something to sidestep this "perk".

 

[stoke]

You're probablee 100% correct BTTB. *sigh*

 

[Jongi]

Why would they take away the ability for a person to utilise positive equity they have against their property? That would be going against international norms.

 

[Syndyre]

Why would they take away the ability for a person to utilise positive equity they have against their property? That would be going against international norms.

Maybe they would have a lower rate subject to certain restrictions or a market rate with more flexibility as we have today. As long as people get the choice its not an issue really.

 

[BTTB]

Why would they take away the ability for a person to utilise positive equity they have against their property? That would be going against international norms.

If the "better" rate is only applied to home loans I suspect part of the risk then would be carried by the Government?
If this is the case I do not think a Access Bond would be a viable option.

In my own experience I find a Access Bond has certainly got many advantages. I have one.
My own business property was financed by Small Business Development who do not employ a Access Bond facility, although I was able to take out a second mortgage with The Bank for loans and overdraft.
Subsequently I moved my profile away from Small Business Development, mainly because I think my needs had changed, but for all earnest they were the best at the time. They looked after their clients and the last thing on their mind was to sell off your property during the "winter" months.
A Bank will sell you out if they have to and that is a fact. They are a business and cannot carry you.

Living with a Access Bond means you can loan the full amount of your Bond all the time. This may or may not be a good a thing?
If the **** hits the fan you have no available liquidity and nothing to loan against, unlike a fixed loan which may be half paid off at that point in time if the loan is a few years old.
You can always capitalise interest. Small Business Development will do this if the need is there. I do not think Banks will?

I don't know?
The suggestion from Tito has merit. At least for the poorer to middle class?
For the rich it wouldn't matter as they probably float a few shares on the stock exchange when they need a few bucks.