
Does today’s interest rate hike mean you should fix your home loan?
The South African Reserve Bank (SARB) has hiked the repo rate by 0.5%, a massive blow to homeowners that has led to many asking what options exist to keep afloat.
Kaya Biz with Guguletthu Mfuphi spoke to Mfundo Mabaso, Growth Head, FNB Home Finance about whether the interest rate hike means homeowners should fix their home loans.
LISTEN TO THE FULL CONVERSATION HERE:
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Mabaso shared how when you fix your loan repayment amount, regardless of market alterations, you continue making your monthly home loan payment during the initial time that was agreed upon. As a result, you will be able to accurately account for your instalments in your budget.
However even though a fixed interest rate poses less of a danger for you, the bank will probably charge you more at first because of this.
He also added that fixed rates are better for people who want to be able to budget with 100% accuracy, while variable rates are for people who are willing to gamble on market forces moving in their favour.
After the initially agreed-upon period, fixed interest rates end, and you will then have to choose between returning to variable interest rates or negotiating a new fixed rate with the bank.
It’s also crucial to keep in mind that the choice of a fixed interest rate is only available after bond registration.
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