While ongoing economic pressure continues to affect buyers’ affordability, Leonard Kondowe, National Manager at Rawson Finance, says that as the interest rate holds firm amid economic fluctuations, lenders are still eager for qualified home finance applicants.
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With the South African Reserve Bank’s announcement that interest rates will once again remain unchanged, maintaining the prime lending rate at 11.75%, Kondowe comments that unchanged interest rates have played an important role in rebuilding market confidence.
He says, “Applicants with pristine financial profiles can look forward to some very favourable home loan offers. Lenders are pulling out all the stops to incentivise low risk bondholders to join their portfolios. The higher an applicant’s risk profile, the higher the interest rate lenders will require them to pay – assuming they are willing to take on the risk at all.”
“Taking the time to address outstanding debt, minimise expenses and save for a reasonable deposit can have a very real effect on your eventual bond offer, and the total interest you’ll end up paying over the lifetime of your mortgage loan.”
A positive outlook
As for how the property market responds to the interest rate announcement, Kondowe says it is with a positive outlook.
“With cuts still on the horizon, we expect property activity to continue increasing steadily. Cash buyers will still remain active, as will those with more resilient finances able to weather a few months of their high repayments in order to benefit from advantageous property prices and the future interest rate decline. As for first-time buyers, it will be beneficial for them to get a pre-qualification before they enter the property market so they know exactly what they can afford and plan their finances accordingly. ”
“We are confident that the interest rate will come down in future, but we are not certain when it will happen or by how much,” he says. “Instead of relying on what might come, focus on finding a property with good long-term equity growth potential, and building the financial resilience to handle any unforeseen bumps in the road.”
