| |
|
|
| |
I think they should only pushing short term debt
17/04/2008 11:12
Lets face it, most of us bought a house because we needed a place to stay. Why punish us together with those that live(d) lavishly and made up huge dept on their cars/credit cards etc? But please don't expect intelligence from Tito since he got the country in this mess in the first place by not reacting quickly enough. Thanks Tito!U should have been fired looooong time ago. - M |
|
 |
| |
So right
17/04/2008 11:14
Hi Louis
I couldn't agree more, there is a way of seperating the bond interest rate from the rest, they wont do it because that would reduce their income. Bond debt should be seen as a necessary debt with some relief attached.The motor dealer issue is another thing, the prime minus 5% deals are generally not quite what they seem as many work on the balloon payment model. - gman |
|
|
| |
One can only assume...
17/04/2008 11:17
that the SARB rate is passed onto the banks which is then passed on to the consumer...
The SARB lends money to the banks at the repo rate banks in turn loan money at whatever the prevailing rate is...If the repo rate is increased on all loans then it stands to reason that the banks would increase their rates as well...The banking sector is well regulated I therefore doubt that the banks would operate in a manner that would be unethical.. - Masti |
|
|
| |
Louis van Rensburg
17/04/2008 11:20
Nr 1, it would be an administrative nightmare to keep track of who got when and what and how much debt? Nr 2, when you go into debt, you cant just look at if you can afford it now...you must ask yourself what if the interest rate rises...you should at least be able to take a 4-5% increase, if not, dont take on debt. Simple. - jannie-die-raadgewer |
|
|
| |
I get your point.
17/04/2008 11:25
But according the little knowledge i have you are allowed an option of negotiating a fixed rate on your debt..so that you won't be affected by the flactuations.But most of us don't opt for that..we argue:'but if they come down then i lose out".
The banks and other financial institutions are in the business of making money..it's up to an individual to resist the temptation.'If you don't need it , don't take" - boyzie |
|
|
| |
And then....
17/04/2008 11:27
So when the rates go down you will certainly expect to pay less then wouldn't you or would you be happy to continue paying the higher rates? Not quite the answer.I bought a house at super low rate (from back then) but budgeted at 20.5%. Affecting my affordability of course. Why? This makes sense as when the rates are low, I put the extra as capital payment against the bond, when high I can still pay and I pay less interest on the total bond. Economic 101. - Chazz |
|
|
| |
BANKS
17/04/2008 11:27
I blame the banks and any other institutions offering easy credit. They send SMS's and junk mail offering immediate pre-approved credit cards and loans. Anyone in a financial burden is going to accept these offers to get them "out of trouble" and then battle to pay them back. WE, the sensible, have to now suffer because of it. I have just had to sell my home because I can no longer afford the bond repayments even though I bought a home well within my means at the time. BANKS ARE A CURSE! - als |
|
|
| |
Blanket solution to everything!
17/04/2008 11:28
Interest rates mean more interest beind added to the money owed, so even if you bought your car or house two years back, you are still owing money, therefore interest will automatically also be added to your loan. Otherwise there would be no prime rate because everyone will be having their own interest rate. Unfortunately for us, It's a blanket solution to everything. - Sello |
|
|
| |
er... you need to do some research...
17/04/2008 11:29
The interest rate is not a "fine" it is a cost. The bank has a cost of doing business (it costs to borrow from the Reserve Bank) and they have to cover this by passing on increased costs to consumers. What you propose is like only getting new customers at petrol stations to pay increased petrol price. Perhaps if you can convince the banks they don't need to make quite so much profit it could work... but then when you spend on your credit card is that to be charged at the "new" or "old" rate? - baker |
|
|
| |
Well said Louis
17/04/2008 11:30
we are in the same boat and I couldn't agree more. Tito once murmered that perhaps bonds should not be affected by these inflation/debt reducing increases. Sadly, it was just a murmer/burp/fart or whatever. - Ted Haller |
|
|
| |
High interest rates can work in your favour!
17/04/2008 11:31
On a contrary, you can still make good use of the high interest rates. You can invest your money in an interest-earning facility at your bank and gain high interest from the bank just the same way banks gain high interest from buyers. Banks can also feel the pinch if more people did this, but unfortunately everyone is focusing on loaning from the bank and buying. - Sello |
|
|
| |
retrospective..
17/04/2008 11:37
The interest on Bonds is excluded from the CPIX (inflation) calculations i.e. higher bond payments are not considered a factor in inflation. (not my decision, dont argue with me please). I support the view that "old debts" should not be charged with higher interest rates. however, some banks offer a fixed interest rate for bonds. Do read the fine print!!!
- Benzo |
|
|
| |
Bad debt
17/04/2008 11:37
Funny how SA'icans are choked with increased costs everywhere, while Gov can cancel Cuba's debt of R926.8 Million rand!! Here is their reason:
"Given the assessment of Cuba's debt position, government is of the view that Cuba was not in a position to meet its obligations in the foreseeable future,"
So this means that Gov could have given 50million SA'icans over R18000 pasella!!
What a joke and I am really gatvol of their attitude. By the way - my costs have gone up with almost R3K pm! - Johan |
|
|
| |
Rates
17/04/2008 11:38
Your logic does not make sense. You could have fixed your homeloan rate a year ago. Banks now pay more to lend the money to you, so you have to pay more. Simple economics. Your interest on your house goes up, so you can spend R4800 less on other things, thereby not pushing our inflation up. Really BASIC economics! - Flip |
|
|
| |
Overextended your own fault
17/04/2008 11:38
Its clear that your greed has blinded you. You are like most South African who believed that rates would never rise so stupidly maxed out your credit limit on the assumption that rates would never rise. The bank cannot be responsible for your own fiscal ineptitude and now you must face the punishment. Maybe this is a good time to learn some fiscal discipline. I applaud the Tito for his action - those who do not listen must feel! - jon |
|
|
| |
Louis v Rensburg
17/04/2008 11:42
The current systems are sophisticated enough to select on "date" of loan. Banks do not have an interest in doing this. As far as bonds go, banks do hedge long term loans and keeping interest constant for the duration of the loan should be possible as current offerings proof. The borrower must accept that -when interest goes down- his/hers does not! - Benzo |
|
|
| |
It is not retrospective punishment
17/04/2008 11:44
The part of the original principal debt that you have already paid is not affected by the changes in rates (whether they drop or increase). You outstanidng principal debt is current and your banks is therefore entintled to charge you for that debt at the prevailing rates. However, you could negotiated to have this rate fixed for some period. Warning! banks have well trained forecasters than the average person. - david r |
|
|
| |
AFFORD??
17/04/2008 11:44
"Yet I am punished, in retrospect, for buying a house that I could, at the time, afford. Now I battle to make ends meet." If you bought the house you could afford using your method of only paying cash you wouldnt be in this position. You cant afford the house like many cant without a bind - unlucky
- muscles |
|
|
| |
YIP
17/04/2008 11:45
Welcome to our new South Africa. - ICEMAN |
|
|
| |
And blaming banks...
17/04/2008 11:45
Really, do you blame Mac Donalds for becoming fat from eating their burgers? You can't blame banks for you choosing to live above your means. (If you could really afford the house, it did not mean you should have bought THE car as well) - Flip |
|
|
| |
To Jannie
17/04/2008 11:46
Dude, you can't just hover around homeless waiting for the market to be favourable. I was renting until I was told to move out because the house was being sold, this after having rented in 4 different locations in 4 years. I am a first time home buyer, at the time we had no choice and for the sake of our sanity we decided to buy because we could no longer afford to be tossed around by selfish landlords. It's not just about taking on debt but the cost of living has doubled. - Point Blank |
|
|
| |
"There's a fool born every minute and most end up writing for News24"
17/04/2008 11:46
Gee, Louis, can't you read? Didn't anyone explain to you how interest rates work? When you bought your house, didn't you know that the rate was fluctuating? You could have asked for a fixed rate or agreed to a fluctuating rate. Now you blame everyone but yourself, and others over here turn it into a government bashing exercise.
People like them deserve to live as squatters in a shack - then interest rate won't affect them! - WAM |
|
|
| |
@ Johan
17/04/2008 11:48
Good point, k@k arithmetic. 926.8 million divided by 50 million equals R18 (not R18000). - Do the Math |
|
|
| |
Eish??!
17/04/2008 11:48
Judging by this article it's pretty clear why SA is in a huge amount of trouble. The understanding of basic economics is seriously lacking. - Nick |
|
|
| |
Overextending
17/04/2008 11:50
One of the first things you should ask yourself before making debt is are you going to be able to afford it if the interest rate increases significantly? Crredit approvals should actually be based on this (if they are not already?). Unfortunately that's the way it has been and probably always will be. Some tax relief for home owners could go a long way but SARS is not too keen on that. Man, am I glad I bought 6 years ago - I would probably not be able to afford my house if I had to buy it now. From R200 000 in 2001 to R800 000 in 2008. I feel for you new buyers. - envirokid |
|
|
| |
Fixed Rates
17/04/2008 11:54
The problem with fixing your rate, is that the banks don't allow you to fix your rate on the current rate you're paying, but about 2% above. This means, that the rate has to go up at least 4 times ( mostly 0,5%) at a time, before you will pay the same rate as what you would have fixed your rate on. - Fixed rates |
|
|
| |
Interest Rate Hikes
17/04/2008 11:55
Interest rate hikes as we know are a way of curbing spending. However, I feel that other measures should also be used such as reducing the period of repayments on motor vehicles from 60 months to 54 or 48 months. Enforce bigger deposits on all credit purchases from furniture to motor vehicles etc. Prevent the Edgars and Truworths etc of having 6 months interest free cards - reduce them to say 4 months. That will ensure larger payments and will reduce spending. - Tonsil |
|
|
| |
@Point Blank
17/04/2008 11:57
I am also a first time home buyer..I also struggle with the rates that increase, so I know how you feel. My point was just that you need to look at the future too before taking on debt. But it is hard...I know - jannie-die-raadgewer |
|
|
| |
Banks and all these financial places
17/04/2008 11:58
Do not I repeat DO not have the best interrests of the consumer in mind , No matter what they say , They are so quick to dump you in debt and just as quick to nail you if you dont payback with loaded interrests. - bongani |
|
|
| |
@ Do the Math
17/04/2008 12:02
Yeah youre right :-) but that was not my point. Why could Gov cancel forreign debt but our debt is skyrocketing!?!? What relief is there for us? - Johan |
|
|
| |
@ Louis and all, talk to your bank & plan forward.
17/04/2008 12:03
Agree with principle, but you are suffering the consequences of not planning at time of low interest rates. All the banks provide a facility where you can apply for a fixed rate for a predefined term. Yes, you do pay a slight premium, but you would have saved a significant amount in repayments. Age old problem of only complaining when times are BAD and will get worse. - Matrix |
|
|
| |
Fixed rates
17/04/2008 12:04
For those that were proactive enough like myself, we have not been hit by the recent interest rate hikes.
I choose a 5 year fixed rate in April 2005 with the 'green' bank :-) and i have never looked back. Since then there have been (9 x 0.5%) rate hikes = 4.5%. My rates currently fixed at 13.5% ! - Smart |
|
|
| |
@ Do the Math
17/04/2008 12:06
Yes you are quite right and I apologise :-) but that was not the point I was trying to make. If Gov could cancel forreign debt because they can't make ends meet then surely they SHOULD (but ISN'T) giving us any form of relief. Just imagine your name in the place of "Cuba"? What a glorious day it wouldn't be! - Johan |
|
|
| |
Surprised
17/04/2008 12:08
I am pleasantly surprized at the financially astute people commenting here today! Louis, tough luck man. Even someone with a basic understanding of economics knows that things go up and down all the time. The clever ones factor this in when buying on credit. - Sunshine |
|
|
| |
Banks Fault??!!??
17/04/2008 12:09
Why is everybody so quick to blame the SA banks, they just follow what the central bank has done. Is it SA Reserve Banks fault that oil is at $110+ a barrel, is it the SA reserve abnks fault that global food prices are at an all time high?
Imported inflation!!! The govenor has a mandate to maintain CPIX between the 3 to 6% target range. Granted, I do feel they left interest rates too low for too long... but this was to encourage growth. - Malcolm |
|
|
| |
@ Johan
17/04/2008 12:09
I too was amazed to read the story of the Cuban debt. Don't worry Cuba, we here in SA are so financially secure that we will wipe the slate clean of R926.8 million debt. Needless to say I am stupified. We are paying for other countries debt as well as our own. Go figure! - Nicky |
|
|
| |
RB is reducing money supply
17/04/2008 12:11
Louis, what you describe is the whole idea behind controlling inflation with interest rates. As rates go up, consumers have less money to spend. This reduces the room retailers have to increase their prices, otherwise they will lose business. It hurts, but it is the only tool the RB has to control inflation. If this is not done, we'll end up with a worthless currency like Zim. - Dilbert |
|
|
| |
@M Tito is not the problem, R U?
17/04/2008 12:14
The normal banks are the go between, between Public and SARB. SARB is independant, but subject to Gov. They have very few tools to regulate the economy. Prime lending rate to banks is what they use to regulate. Therefore, the issue is more in the hands of the public than SARB. If you spend, you pay. Wheteher taxes is fair or not, is another question. SARB cannot be blamed for this. - Matrix |
|
|
| |
Basic economics
17/04/2008 12:17
What you say here just demonstrates a lack of understanding of basic economics. The bank will charge you the new interest based on what you're still owing , not what you borrowed(the initial value).If they charged interest on what you borrowed(i.e initial value), then your article would be correct and the traffic fine example would make sense.In any case , why didn't you opt for a FIXED rate? - JeffM |
|
|
| |
Interest rates
17/04/2008 12:18
Louis - try to extend the period of your home loan {on the proviso that when rates come down again, you will pay extra into the bond to reduce the total interest payable).As for paying diff.rates on debt -that already happens. Mortgage rates are typically below prime, while credit cards etc charge up to 30% interest. - VG |
|
|
| |
Re :Iceman - new SA
17/04/2008 12:20
"Welcome to our new South Africa" - ICEMAN
You really believe that the rising of interest rates is only a "new" South Africa thing ? Apply your mind ICEMAN - JeffM |
|
|
| |
@ Dilbert
17/04/2008 12:22
You cant control inflation which comes from petrol/oil prices and weak rand with interest rates... - jannie-die-raadgewer |
|
|
| |
Exclude Mortgage rates.
17/04/2008 12:24
Most people on this forum seem to have a good grasp of economics. The only suggestion I have is that when rates go up, the reserve bank should exclude mortgage rates (banks will then not increased rates on investments) as we do with inflation. This will allow the SARB to punish car buyers and those who buy clothes and electronics, thus saving growth. Some countries have considered this idea, why penalise those who invest in fixed investment, penalise those who buy soft items especially imported. - Libembe |
|
|
| |
@ Bongani,
17/04/2008 12:26
At the end of the day, its your own fault OR are you indicating that you are not intelligent enough to figure this out? If it was your business in a free enteprise economy, what would you do? On the otherside of the coin, the current ANC aliance partner is advocating socialistic economy and nationalisation of financial institutions. That would solve your problem, but kill all initiatives / entrapeneurs. - Matrix |
|
|
| |
Iceman
17/04/2008 12:32
Your comment shows that your knowledge about world markets is so very little. These high interest rates are not a uniquely South African problem, the USA is in a recession now with high food and fuel prices. European countries are also experiencing the escalation of fuel prices. Our situation was caused by world markets and the ever-increasing crude oil price. Not that you will understand anyway, but I thought I should try. - Sello |
|
|
| |
Pay or leave
17/04/2008 12:33
Well guys all I can suggest is pay or leave the country! I did! - Jane |
|
|
| |
IS Debt Good or bad ?
17/04/2008 12:33
The fact is debt is good & bad @ the same time. if everone just makes use of cash then 95 % of the world will be out of work. Show me anyone, business & goverment in the world that is debt free, the problem is finding the balance. as for budgeting for a 4 to 5 %rate increase is inacurate,in 2004 the prime rate was 10% now it is 15% <4 yrs later! The need is to pass a law that defiens Debt into 2 types: nessasary and unnessasary. We need a basic home and a car 2 get 2 work. Creditcards are bad. - EDMUND |
|
|
| |
Tito said...
17/04/2008 12:33
that we must tighten our belts again. Have you seen what Tito looks like? Hopefully he finds a spare notch in his belt to tighten...
As for me, I had to get a new belt! hehehe - Werner |
|
|
| |
Don't be daft!
17/04/2008 12:38
Come on, Louis van Rensburg, don't be daft! You can't compare a homeloan to a traffic ticket. Once you've paid the traffic fine, it's GONE. But when you pay your monthly homeloan instalment, the homeloan is NOT suddenly gone. I suggest that you (1) read the fine print next time before you sign a 20 year mortgage contract, (2) budget for a rate hike of 5%, (3) if you can't afford it, don't buy it, and (4) don't blame Tito if you haven't done your "economics 101" homework. - Mark R. |
|
|
| |
Capitalism
17/04/2008 12:41
That evil system is called CAPITLISM. It encourages the rich businesses to get richer at the expense of the poor. So Louis as long as you still owe, you must pay the current rate. How about we fight for a better system, and by that I don't mean Socialism or Communism. I mean something new. - Zweli |
|
|
| |
@ Werner
17/04/2008 12:47
Get a new belt... as long as it is not on credit LoL - Malcolm |
|
|
| |
Louis!!!
17/04/2008 12:47
What? Very scary to see this kind of mentality from a homeowner... Please get yourself educated about financial matters a.s.a.p! - JG |
|
|
| |
Irresponsible
17/04/2008 13:03
Some thumbsuck maths: Say Louis' bond WENT UP by R4800 since prime bottomed at 10,5% , then his bond was about R15,000 initially - enough for a pad of around R1,5 million at the time. Definite luxury! Not RDP housing, not a 2-bedroom flat, not even an average house, so every bit as irresponsible as new cars or credit card debt if you can't afford it. Required salary: around R45,000 per month. Don't tell me you're struggling.
Bye-bye Louis - Madman |
|
|
| |
Good dept vs bad dept
17/04/2008 13:03
Agree with Libembe, A house mortgage is considered good dept but a Woolworths clothes account is bad dept. Make the interest rates applicable to bad dept. - Carel |
|
|
| |
Just another thought, If banks did not hand out CCards
17/04/2008 13:04
Then our previously AND currently disadvantaged people would probably alos cry foul and say it is unfair discrimination. In the final analysis, it is up to the individual to decide, save or debt. Edmund, I take it you are part of the new elite that can afford debt? Big & car(s), Big house, etc. Why not use bicycle? Some of us do, and its healthy excercise too! Oops, maybe you are too big, i.e. use Ccard debt for food? - Matrix |
|
|
| |
Sounds to me
17/04/2008 13:27
That a problem more serious than the curernt inflation has hit the country and that people havent figure it out. By having massive increases in Property prices, the young and less established have had to deal with the worst side of a drastic increase in the cost of living. The average young adult cannot afford even a middle class life anymore and interest rates increases will cripple even a person with little debt if his house has cost him a million rand. - Mallencolly |
|
|
| |
And stores send out store cards without consent?
17/04/2008 13:27
Well written Louis, I agree with everything. To add to this, I have received Woolworths, Mr Price and Truworths store cards in the post, which I really dont want, but imagine all the people who get tempted?! So much for the new credit act, it's worse than it was before. These companies should be approached and reprimanded. - Annoyed |
|
|
| |
Separate rate for Home Loans
17/04/2008 13:28
Home loan is a good debt so i believe there should be a seperate rate for it. How are people like myself, a recently employed graduate suppose to get into the housing market????? - Andre |
|
|
| |
Libembe ... won't work
17/04/2008 13:46
If interest rates on houses are kept low to protect homeowners. I buy my cars cash by borrowing from my home loan, it is the sensible way to borrow money. RATHER .. the government should give everyone who buys a house a tax rebate on the first R2000 (or whatever amount) a month of the repayment. This incentivises people to buy homes, which accumulates wealth. Then the rates can go up to "punish" people who cannot plan their finances properly (Sorry Louis - that would be you!!). - Excalibur |
|
|
| |
@Madman
17/04/2008 13:58
Good Observation (saves me from typing it)! @Louise - You should have done the responsible thing in the first place like Chazz and not written this to prove your ignorance. - italic_s |
|
|
| |
@ jannie-die-raadgewer
17/04/2008 14:17
Agreed, RB cant control imported inflation. But I guess they are trying to minimize the imppact of it on the economy by reducing the money supply. The repo rate is a blut tool, but it is all they have. - Dilbert |
|
|
| |
We will get used to it.
17/04/2008 14:38
I think the rate must just go up to 24% like it was in 1998-09-02 and remain fixed.that way we will all know that debt is expensive.what's the point of inceasing the rate by 0,5% this month, and dropping it by 0,5 next month.If you say government doesn't care,you are wrong.If you lose your house because you cannot afford the repayments and be so desperate, that's where government get involved, they can build you an RDP house for free.Isn't that caring? - Hulisani Maphiri |
|
|
| |
|
|
| This comments facility is now closed. |
