In the wake of today’s interest rate hike by 50 basis points, First National Bank (FNB) has appealed to customers who are struggling to meet their debt obligations to come forward for help.
“These are tough times for the South African household. The evidence indicates that the pressure from the rising costs of living is being felt by all types of consumers,” says FNB Home Loans CEO Jan Kleynhans.
“We would advise customers who find themselves unable to honour their homeloan repayments to contact us and discuss repayment terms. The last thing FNB Home Loans wants is to repossess homes of struggling customers. The process of repossessing a home has proven to be costly and burdensome. We would rather sit down with a customer and work out favourable ways in which they can repay their debt.”
Kleynhans said one of the options that FNB Home Loans uses to restructure debt is to allow customers to pay only the interest portion of the home loan repayment for customers who are not in arrears. This type of arrangement may go on until the customers’ financial circumstances improve. FNB Home Loans also allows consumers to extend the loan period.
FNB’s new rates for new and existing FNB home loans will be increased by 0.5% with effect from tomorrow, 11 April 2008.
The costs of rising interest rates as the average monthly repayments on a mortgage loan have risen by 32% after today’s interest rate hike.
The cumulative interest rate hikes pushed monthly repayments on a R500 000 mortgage over 20 years to R6 583.95, from R4 991.90 when prime was on 10.5% in June 2006.
Below is a table that shows how the latest rate hike will change repayments on different mortgage loans:
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