Homeowners in South Africa are shooting themselves in the foot

South Africans are increasingly struggling to repay their home loans, and many are not acting quickly enough to prevent foreclosures.

According to Sentinel Homes, the number of mortgage accounts that are up to date dropped from the historic average of 92% to 88% in Q4 2023, illustrating the financial distress many South Africans face.

Sentinel Homes added that the number of loan accounts with arrears has increased by 50% from 18 months to December 2023.

Experian’s latest Consumer Default Index (CDI) for Q1 2024 also dropped, primarily due to home loans.

The CDI dropped from 4.56 in Q1 2023 to 4.69 in Q1 2024, driven by the 21% deterioration in Home Loans from 2.22 to 2.68 year-on-year.

Source: Experian

“Globally, inflation has been quite stubborn, and interest rates remain high as a result. In South Africa, the repurchase rate (repo rate) of the South African Reserve Bank reached its highest level in 15 years,” said Renier Kriek, managing director of Sentinel Homes.

Several factors have contributed to the high interest rate and inflation environment, such as supply-chain bottlenecks during the Covid-19 pandemic, the Russia-Ukraine war, and the recent conflict in the Middle East.

Interest rates are now only expected to drop from next year as inflation has proven sticker than anticipated.

Act now and speak to a Professional to assist you!