Staying ahead of your finance, forex and real estate in South Africa.
Monday, 26 November 2012
So managing your home loan and prioritise your debt
Pretoria: South African homeowners are trying to do a better job of keeping up with their bond payments and we think this is being helped by a perception of an improving housing market and of course the constant low interest rates that are making it easier to refinance and also that loans are getting a bit easier to get.
The percentage of bond holders at least two to three months behind on their payments fell in the third quarter to 5.41 per cent, the lowest point in more than three years, credit reporting agency TransUnion in the USA stated and we in SA seem to be leaning that way as well. I look forward to Loos report and Rode reports at year end. In the USA, the mortgage delinquency rate has not been this low since the first quarter of 2009. Still, it remains well above the 1 per cent to 2 per cent average historical range, an indication that many homeowners still are struggling to make their payments.
But, here back home in SA, the question is: have your finances turned the corner? Well, many homeowners changed the way they prioritize their financial setup after the value of their homes crashed with the world housing crash. I wonder if this has changed yet? I think not.
We know that people used to pay their bond first, and now they pay their cars and their credit cards and then accounts before their home loan.
Even so, some owners are benefiting from the gradual turnaround in housing this year as we see prices stabilise, interests rates remaining low and generally a better feel out there.
US home prices jumped 5 per cent in September compared with a year ago, the largest year-over-year increase since July 2006, according to data provider CoreLogic.
Generally speaking, higher prices help bring down the number of homeowners who owe more on their bonds than their homes are worth, potentially making it easier for them to lower their monthly payments by refinancing.
And interest rates remain near record lows, making it possible for more homeowners to qualify for refinancing and normal financing. The average rate on a 20-year mortgage was 8.5 per cent land has remained below 9% all year. Awesome.