Interest rates are expected to start increasing in 2011 and FNB predicts we will see the prime lending rate as high as 12% by the end of next year. So if you are buying a home or planning on drawing down on your bond for renovations make sure you factor in higher bond repayments.
If rates increase from the current 10.5% to 12% – for every R100 000 you borrow you will pay R125 extra a month. On a mortgage of R700 000, that equates to R875 extra a month. Between interest repayments and your electricity bill, 2011 is going to once again be a tough year for households.