South Africans are struggling to meet their home loan commitments as the current interest remains the highest in 13 years.
That’s according to the Chief Operating Officer at SA Home Loans, Zakeni Dlamini.
On Thursday, the South African Reserve Bank announced a 50 basis point hike to interest rates, taking the current prime lending rate from 11.25% to 11.75%.
It marks the 10th increase, since November 2021, totalling 475 basis points over the period in less than two years.
Dlamini says, even sales for new home loans have dropped significantly as people can no longer afford to buy homes and are rather opting to rent properties.
“Every time the rate goes up, if affects the whole property market. The cost of owning property rises. Most of us can only access property through home loans and as the rates go up, instalments are more expensive and less people can afford to get onto the property ladder. Home loan sales volumes are down in the region of about 25 percent and more. It has had a massive impact and does affect the entire value chain that lives of the property market.”