As rates hike again, wealthy South Africans are having to fork out hundreds of thousands every month to pay off a bond.
The South African Reserve Bank has raised interest rate yet again, making it harder for indebted South Africans to pay off their bonds.
In light of the recent rate hike, an R10 million bond at 11.75% would have to pay up to R108,371 a month – equating to R26,008,970 by the time the bond is paid off. Greg Dart, a director at High Street Auctions, said that this decision by the Reserve Bank was unnerving as the increased rates follow the National Treasury’s dire economic outlook.
“The market was expecting 50 basis points, but the pressure it will place on consumers and the business sector is huge,” said Dart. “Sadly, it also won’t be the last rate hike we’ll see this year because we’re snowballing. Lady Russia, Eskom, record currency lows, foreign investor confidence wiped out… these are big problems for which we don’t have solutions.”“But if we see an end to rate hikes in the first quarter of 2024, the market will pick up and in likelihood, gain greater momentum as the year progresses.
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