BUSINESS NEWS - Interest rates jumped by 25 basis points at the last MPC meeting in March, leaving the prime lending rate at 7.75%.
As the effects of this increase start to kick in, households will most likely need to find ways to cut back on expenses in order to afford the higher debt repayments.
Rising fuel and food costs, as well as higher debt repayments resulting from the latest interest rate hike, will undoubtedly put pressure on household budgets.
While it might take some effort to cut back on household expenses, homeowners should always prioritise keeping up with their bond repayments to avoid the risk of having their home repossessed by the bank.
There are several options homeowners could consider lowering their monthly household expenses.
The simplest, but often least desirable option would be to cancel any inessential subscriptions, for example, Netflix/Spotify/iTunes/Game Pass/Showmax/DStv.
All these small fee subscriptions do not seem like a lot on their own, but as a collective, these amounts can accumulate to a lot more than many homeowners realise.
Homeowners should also consider that, depending on the size of the home loan, cancelling just one of these subscription services might be enough to cover the increase on the bond repayment caused by the interest rate hike.
According to BetterBond, on a R1 million home loan taken over a 20-year period, the monthly instalment increased by R153 following the March interest rate hike – which is close to the cost for many of these subscription services.
For those without subscription services to cancel, homeowners could downgrade their cellphone contracts or switch to pay-as-you-go options.
Those who do not work from home could even consider downgrading the home’s internet connection as well.
There are also more sustainable options that homeowners could consider that would be good for both the planet and their pocket.
Find ways to lower the household grocery bill by creating a vegetable patch at home where you can grow your own supplies.
This can help minimise the packaging waste that results from a trip to the grocery store.
