The South Africa Reserve Bank (SARB) has released its latest biannual Financial Stability Review. The review serves to identify and analyze risks to the local financial-sector stability.
In its report the SARB said that the current banking industry remains healthy and that the forecast of the banking industry remains strong despite the anticipation of an interest rate hike.
The SARB stated that residential market activity pointed to a cooling-off phase following above average growth in house prices, and that there is no indication that the current condition of the property market will pose a risk to the banking industry.
Although, concern was raised that if interest rates are marginally raised the number of home loan defaults would increase.
Mortgage Holders have grown accustom to the lower interest rates, and the concern is that the possibility of an increase in the default rate among bond holders, who may have been too willing to take on higher levels of debt at low interest rates, may pose a risk to a Banking industry which is currently very health.
Before the interest rates are raised mortgage holders should take steps to lower their overall debt and fortunately there are a number of options one could take to combat a higher interest rate.
How do I lower my debt?
1) You can lower your mortgage repayments by switching your bond to a competing bank. If your have an existing home loan with ABSA, for instance, you could switch your mortgage account over to FNB home loans for a lower interest rate. The lower rate means youâ€™ll be pay less per month for your bond and youâ€™ll make a huge saving over the term of your home loan.
2) And/Or consolidate your debts â€“ Your mortgage account is an excellent resource and because your home loan interest rate in often much lower than the interest charged on other loans or credit cards you can use it to consolidate these accounts.
By using the funds available to you in your mortgage you are able to payoff these high interest debts and lower you total monthly debts. Leaving your with only one account to pay â€“ your mortgage.
If you would like some assistance please complete this and a consultant will contact your personally to assist you further.