Consumers should not make harsh decisions like selling their property, but rather revise their budgets and weather the storm.

“Look for cheaper options on things such as insurance products. Competing companies are likely to give you a better deal to acquire your business, especially in the current economic climate,” says Deon Lessing.

He quotes Finance Minister Trevor Manuel in saying that the inflation target band will remain unchanged at 3% to 6%. But this month the measure of inflation will change from the current CPIX inflation to headline CPI. This should bring about a lower inflation rate.

“Mortgage interest rates will be replaced with owner’s equivalent rent. Mortgage interest rate changes directly affect the measure of housing costs, which is why they were previously excluded from the target measure of inflation. The new measure will enable the cost of housing to be represented in the target measure,” says Deon Lessing.

“Inflation on necessities such as food and petrol are inescapable, which has repercussions on consumer spending. It’s simple: rising inflation erodes household spending. Even though food and petrol prices are now dropping, the weaker Rand has, to some extent, cancelled the effects on this.”

The current CPIX is based on expenditure patterns in 2000, whereas the headline CPI will be measured on the household income and expenditure survey of 2005/2006. Spending patterns have dramatically changed. Consumers have been hit with a cumulative 500 basis point interest rate hike since 2006, which lead to consumer spending declining. Soaring inflation rates reached a record high of 13,6% year-on-year (y/y) in August, and this, coupled with slowing income rates, has left consumers tightening their belts.

“Although we may be through the eye of the storm, we are still in for tough times ahead. It is important not to panic as fundamentally the South African market is still strong. We will not see growth in 2009 as we did between 2004 and 2007, but we are still far from recession.”

Manual advised that consumer inflation had been outside the target band for the last 15 months and inflation targeting will remain the anchor for the monetary policy.
Although navigating through this tough economic environment will be a challenge, the government will continue to expand and improve public services, investing in the infrastructure required for growth.

“Although the first half of next year may still be affected by past interest rate hikes, the new measure should bring the inflation rate back towards the target, which will bring about interest rate cuts. The sentiment is that interest is currently returning to the property market, but rate cuts will accelerate the market recovery period. South African consumers are better off than those in the US, who have a debt-to-income ratio of over 130% due to lax credit regulation. The introduction of the National Credit Act (NCA) has helped the South African consumer prepare for the current global crisis,” Lessing concludes.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

ABSA Bank Home Loans

Whether individuals want to buy or build a new home, make improvements on their current home or simply want to invest in another property, then ABSA home loans is the right decision for you.
ABSA will provide individuals with a variety of home loan financing solutions in order to suit the various needs of customers. Included in this is the option to pay your home loan over a longer term of 30 years instead of the normal 20 years.

Individuals may also choose between fixed or variable interest rates where the former will ensure owners repay a fixed amount and the latter simply means that monthly installments will increase or decrease with the inflation rate.

Other than the above, ABSA home loans also offer clients a Flexiserve or re-advance option on their ABSA home loan. Flexiserve home loans simply means that any additional funds paid into the home loan will be made available immediately should the individual require additional funds. A re-advance option is also available and simply means that individuals may borrow the difference between the original loan amount and which has already been paid off.

The Further Advance home loan solution allows individuals to borrow money to the value of the property. This simply means that should the market value of the property increase beyond the loan amount originally paid for it, then individuals may borrow the difference up to the new market value of the property.

Another unique ABSA home loan financing solution includes the MultiPlan option which that a home loan account can be structured into a primary and one or more secondary accounts. The primary account is the original home loan granted to individuals whilst the secondary accounts can be utilized when applying for a new home loan, ReAdvance or FurtherAdvance account.

The secondary accounts can have their own repayment terms, Statements, interest rates and FlexiServe facility.

Insurance in the form of a home loan protection life insurance policy forms part of the ABSA home loan solutions, and will ensure that your bond amount is settled in the unforeseen event of death, disability or dread disease.

Home loan comprehensive cover is available to insure to property against any structural damages while the One-call home solution will ensure better prices and a more pleasurable experience should the home owner move.

An ABSA home buyer’s guide can advise individuals on everything they need to know about buying or selling properties. It consists of six topics namely calculate, locate, make an offer, application, register and moving in.

Individuals can use the  home loan calculator to determine what loan amount they could qualify for, what the monthly repayment amount will be and how different cost, fees and deposits could influence your installment and repayment term. This can be done by simply logging on to the Mortgage Plus website and choosing one of the different options available in the comfort of your own home.

Interested individuals who wish to find out more about ABSA home loans should enquire below.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za