How to apply for a Fixed Interest Rate

In the aftermath of the past 2 years’ economic devastation, consumers are now also being warned that the world’s current volatile geopolitical situation may have a significant impact on fuel and food prices.  This, in turn, will influence South Africa’s current interest rate.

In a recent article by Businesstech, Jeff Schultz (senior economist of BNP Paribas South Africa) states that the SARB will most likely deliver a minimum of 25bp interest rate hikes at the five remaining meetings this year.

Some relevant questions running through people’s minds are:

1. What does this mean for me as a bonded homeowner?
2. Should I change my variable interest rate to a fixed interest rate?
3. If yes, when is the best time to do it and how do I go about it with my bank?

For those of our clients who are considering applying for a fixed rate, please see the steps below as provided by our respective Bank Relationship Managers:

ABSA:

Clients need to visit an Absa branch where they apply for it on the system.

The rate will then be quoted, and options will be provided such as how long a client will want the rate to remain fixed.

STANDARD BANK:

The client would need to go to their nearest Standard Bank branch for assistance with applying for fixed interest rate.  They need to ensure they receive a reference number, as the client will then be contacted by the pricing team within 3 business days to discuss the fixed options available.

Alternatively, the client can contact the call centre on 0860 123 001 – as they should also be able to load the request.

NEDBANK:

The client will need to call the Nedbank call centre on 0860 555 111.

FIRST NATIONAL BANK

The client will need to call the FNB Contact Centre on 087 730 11 44, who will provide them with a quoted fixed rate valid for 24 hours and will provide you with a variation agreement completed with your details for consideration and signing.

The qualifying criteria specify that:

• the Home Loan account must be in good standing with no arrears
• the Home Loan must be registered by the time of application

Exclusions include:

• Building loans (but will be considered once converted to a normal home loan on completion)
• Insolvency, debt counselling, litigation, or accounts in arrears
• Accounts under cancellation at the time of application
• Flexi Option (FNB clients)
• One Account (FNB clients)

It is, however, very important to bear in mind that the Bank does not fix a client’s existing variable rate but that a new fixed rate is quoted which, on average, is 1.5% higher than the existing variable rate.

The rate can also not remain fixed for the remainder of the home loan period but for a period dependent on a bank’s specific requirements.  It usually varies between a contract period of 12, 18, 24, 36, 48 or 60 months.

We want to urge our clients that is not always better to make hasty decisions when it comes to fixing interest rates as the economic climate may change again for the better.  Look at your current and future budget as well as affordability before you decide on a course of action.

Click on the image for a Fin24 article regarding the interest rate hike