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How has Covid-19 affected your home ownership journey?

The Impact of the Covid-19 Pandemic on Your Home Loan

Couple smiling while planning and budgeting

Owning a home is a liberating experience. It is possibly one of the most important decisions you will have to make in your life. It is important to plan for the future so that when you do apply for a home loan, you are prepared!

However, life can be very unpredictable. The Covid-19 pandemic came from no-where and no-one was able to plan for it. How has Covid-19 affected the home ownership experience?

Government has taken steps to help lessen the effects of Covid-19 on your wallet. As a result, the South Africa Reserve Bank (SARB) decided to reduce the Repo Rate. Banks then reduced the Prime Interest Rate proportionally to that of the Repo Rate. As you know, these rates determine how much interest you will be paying on a home loan.

For example, if you were applying for a home loan and the Prime Interest Rate was 9.75%, your monthly home instalment could have been for example R10,484. Since the Prime Interest Rate dropped to 7.25%, your instalment would have changed to R8,766.

This will definitely help you through these unprecedented times. However, it’s also important to know that eventually, the interest rates will increase and normalise once more. Once it normalises, the home loan instalment will increase. Again, it is very important to try your best and plan for the future to prevent any issues that may affect your ability to pay your home loan.

Stay positive and stay strong during the pandemic. It is more important than ever to take the necessary precautions to stay safe during these tough times. We will make it through this all. If you have any questions about the Covid-19 pandemic, please visit the dedicated Department of Health’s resource portal (click here).