South Africans Paying 35% More on Home Loans Due to Nine Rate Hikes since 2021

South Africans are facing significant challenges due to consecutive rate hikes, leaving them paying 35% more on home loans since the cycle began. the South African Reserve Bank (SARB) increased the interest rate by 50 basis points in March, resulting in the country’s prime lending rate rising to 11.25%. This marks the ninth hike in the current cycle, leading to a total adjustment of 425 basis points since November 2021. As a result, individuals are finding it increasingly challenging to manage their financial obligations, leading to more stress and financial pressure. Major banks in South Africa, including Nedbank, FirstRand, Standard Bank, Absa, and Capitec, reported significant increases in impairment charges, pointing to the growing strain on citizens. Given the dire economic conditions, Capitec CEO Gerrie Fourie noted the bank’s decision to limit its credit facilities, making over 900 changes to its credit policies as a result of the increased risk associated with credit usage. The CEO of Lew Geffen Sotheby’s International Realty, Yael Geffen, expressed concern among homeowners, stating that “No salary increases can accommodate the R5,500’s worth of monthly mortgage repayment hikes we’ve experienced in the last 18 months, which is the case for every household in the country currently servicing a R2 million bond.” However, some economists remain optimistic that the global and local economy will stabilise towards the latter parts of 2023, with inflation levels decreasing, and interest rates returning to normal trends.