High interest rates in South Africa have been a notable contributor to the financial strain on homeowners for the past year, forcing many homeowners to downgrade and delinquencies to rise.
Consumers are probably tapping into their existing home loans because they offer more favourable interest rates compared to obtaining new credit for consumption-related products, given the high cost of living., warning lenders to take a more proactive approach in anticipating and managing delinquencies that could arise from consumers facing payment difficulties due to high interest rates.
The repo rate remains at 8.25%, and the prime lending rate stays at 11.75%. This decision was unanimously agreed upon. According to Lightstone’s data for the first quarter of 2024, the average property value in South Africa was R1,377,014. home loan account delinquency rate of 7.2%—measured as a percentage of accounts three or more months in arrears.Commercial banks initially benefit from rising interest rates as they collect more interest from their existing set of loans, greatly increasing their profit margin.