Latest news with #NationalDebtCounsellors'Association
IOL News
20-05-2025
- Business
- IOL News
Small increases in defaults: what it means for property repayments and mortgages
For the Human Settlements Sector to achieve its housing delivery mandate, there is a need for all relevant stakeholders to integrate their infrastructure plans leveraging the Intergovernmental Relations (IGR). Image: Simphiwe Mbokazi Data from the credit bureau shows that defaults, however small, have increased in property repayments and mortgages in recent years. Benay Sager, Chairperson of the National Debt Counsellors' Association, told Independent Media Property that while it was still a very small increase, it has risen compared to a few years ago, driven largely by the pressure that homeowners are under. 'The movements are driven mainly by changes in the interest rates, and if you look at interest rates five years ago, they were very low in the midst of Covid. "This created a bit of an artificial boom, and since then, the property sector has really slowed down in terms of new purchases. Similarly, in terms of servicing debt in the property sector, things have become a little bit harder,' Sager said. He added that it is not so much debt levels but interest rates that really impact potential considerations when buying or investing in a property. The NDCA said interest rates really drive property ownership, and they were already seeing the slowdown here. It said that unless the interest rates drop significantly, which is unlikely to happen, they did not see this make-up changing much in terms of who can buy property and the other big dynamics happening there. 'Some parts of the country are becoming more unaffordable, like Cape Town, which probably means other parts that are more affordable will benefit.' Sager said that while the property sector is an open market, and that has to be seen playing itself out, rates are a big consideration from a government perspective. 'Rates have been continuing to increase above inflation over the last several years, so perhaps that should be curbed, as we see a significant portion of consumers' expenses going towards paying rates and electricity and other regulated factors. "If these increases can be curbed, and the entities that provide these services can become more efficient, it will definitely benefit consumers,' Sager said. Commenting on the release of the DebtBusters' Q1 2025, Sager said over the past nine years, electricity tariffs have increased by 135%, the price of petrol has risen by 88%, and the compound effect of inflation is 52%. He said as a result, consumers who applied for debt counselling in Q1 2025, on average, needed 69% of their take-home pay to service debt. This was a significant increase compared to previous quarters and the highest since 2017. The most vulnerable consumers, taking home R5 000 or less per month, use 76% of their income to repay debt. Those earning R35 000 or more spend 77% servicing debt. The ratios for these income groups are the highest since DebtBusters started analysing the data in 2016. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. 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Advertisement Next Stay Close ✕ Speaking at the DEVAC Infrastructure Summit last week, Thembi Simelane, Minister of the Department of Human Settlement (DHS), indicated that the they were advancing legislative amendments to ensure fair access to home loans and eliminate discriminatory lending patterns, prevent illegal land invasions and fast-track formal township development and develop the Human Settlements Bill to reinforce a spatially just housing delivery system. Simelane said to improve efficiency across the sector, the department is currently expediting the process of developing the Digital Human Settlements 11 Management System (DHSMS), as part of the broader digital transformation strategy of the government, thereby addressing issues of inefficient beneficiary management and unreliable project data. The DHS minister also said that through their various funding sources and key deliverables, the human settlements sector was able to gazette 50 catalytic projects that are to yield 696 280 housing opportunities of mixed typologies such as RDP Walk-Ups, Free Standing BNGs, Social Housing Units, Affordable Rental Stock, Community Residential Units (CRUs) and Serviced Sites. She said typical examples of these projects include projects like Lufhereng in City of Johannesburg, Vista Park in Mangaung, Greater Cornubia in eThekwini, Matlosana N12 in North West and the N2 Gateway in the City of Cape Town. With these projects, the human settlements sector said it aims to accelerate the implementation of the spatial transformation of cities that is aligned with the Spatial Land Use Management Act 16 of 2013, whilst considering that there are limited land parcels that are located closer to work opportunities. Independent Media Property
The Citizen
03-05-2025
- Business
- The Citizen
Is the interest on your personal loan within legal limits? Here's how to find out
Personal loans and credit cards have a maximum allowable interest rate in South Africa. Although we all watch the increases and decreases in the repo rate with eagle eyes, few consumers know that the rate of interest on their personal loans must be within legal limits. Despite the relief of no VAT increase and an inflation rate below the South African Reserve Bank's target range, many South African consumers still rely on credit to get through the month. Unfortunately, the South African Reserve Bank (Sarb) expects inflation to tick up to an average of 3.6% in 2025 and continue increasing to 4.5% in 2026. This, combined with global uncertainty, means the Sarb is unlikely to make any further rate cuts, Benay Sager, chairman of the National Debt Counsellors' Association, says. 'Add increased electricity costs, personal income tax bracket creep and ever-increasing service delivery costs to the mix of diminishing spending power and it is understandable why so many consumers will continue to depend on credit,' Sager says. ALSO READ: What you need to know about personal loans Important to understand how much interest you pay In this context, he says it is important for consumers to understand how much interest they pay on credit-related products such as personal loans and credit cards. 'It is even more important to compare this to the maximum allowable interest rate to make sure you are charged fairly. 'Unlike other countries, in South Africa the maximum allowable interest rate is regulated by the National Credit Act and the maximum allowable interest rate depends on the type of credit agreement and the date the credit agreement was signed.' For South Africans, the two most important types of credit agreements are personal loans and credit cards. This table indicates the maximum interest rates allowable for each and how these have varied since January 2014' Sager points out that there was a significant change in November 2015, when the regulatory calculations for maximum interest rates were changed. 'This change lowered maximum allowable interest rates and has generally been positive for consumers. Since both personal loan and credit card maximum allowable interest rates depend on the Sarb's repo rate, they both benefited from rate cuts during Covid. 'On the other hand, the repo rate steadily increased since 2022, resulting in corresponding maximum allowable interest rates for personal loans as well as credit cards.' ALSO READ: What you should know about loans Examples of interest on personal loans In 2024, the average personal loan amounted to just more than R30 000. Assuming the loan term, the time a consumer has to repay the loan, is one year at a rate of 28.5%, they would pay R8 550 in interest. In South Africa loan terms can range from three to 84 months. Average credit card balances are R24 000 per month, attracting approximately R430 in interest per month, depending on how the credit card provider calculates the interest and assuming the consumer pays off the full balance every month. This amounts to R5 160 in interest per year. 'While these are illustrative calculations, they indicate that the amount of interest you pay for these forms of credit is significant. It is why it is important to compare interest rates before signing a credit agreement and be aware of the maximum allowable interest rates. 'Although there's a global trend towards this, many people still accept the first approved loan without considering they may be able to get a better deal,' Sager says. ALSO READ: FSCA fines African Bank R700 000 for misleading advertising [VIDEO] Check how much interest you should pay He says consumers who are unsure whether they are paying too much interest or what the maximum rate is should check with an NDCA member. A list of members and their contact details can be found here. Members of the association can also help people who are struggling to repay debt. 'Renegotiating interest rates on debt is one of the most powerful tools in a debt counsellor's arsenal. Under debt counselling, rates for unsecured debt can be reduced to near 0% if necessary to allow consumers to pay back expensive debt faster.' Interest on vehicle debt and balloon payments can also be renegotiated and the period extended, Sager says.
