Increasingly, says Bill Rawson, Chairman of the Rawson Property Group, he is asked if the time is not right to get a fixed bond rate, possibly for the next five years. This question, he says, is being asked because South Africans fear that inflation in the next year will exceed the 6% upper target level and the South African Reserve Bank could respond with an increased interest rate.
“The correctness of these assumptions,” said Rawson, “is by no means guaranteed, especially as, in line with most of the Western World’s central banks, the South African Reserve Bank has shown a commendable reluctance to raise interest rates – and, what is more, if any rises do take place in the next 24 months, they will, in most people’s opinion, be fairly small.”
Such a move can, however, said Rawson, be recommended if the home buyer knows that his finances are already stretched to the limit and they cannot endure any sudden unexpected increases.
Is this the right time to fix the interest rate on your mortgage bond?http://t.co/v8hR8H7Vor
— RawsonPropertyGroup (@RawsonGroup) October 24, 2013
According to Mike van Alphen, National Manager of the Rawson Property Group’s bond origination division, Rawson Finance, those applying for a fixed rate for the next five years are today likely to find themselves charged 2 to 3% above the prime rate, which many people would regard as ‘expensive’ but worth it if, for whatever reason, the buyer does have to budget very carefully and accurately for the foreseeable future.
