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With a cumulative 475 basis points increase since the rate tightening cycle commenced in November 2021, and inflation remaining persitent above the 3% – 6% target range, household finances are deteriorating further exacerbated by sluggish income growth. This is despite consumers having a higher degree of financial literacy as compared to previous financial crisis.

"Like Covid-19, the current economic environment warrants a proactive approach," says Thabani Ndwandwe, Chief Risk Officer Standard Bank South Africa. "As such, various areas within Standard Bank have explored ways in which we can help ease the burdens of our clients who have been impacted by the combination of tough macro-economic factors."

On the back of the series of interest rate hikes, the monthly repayments for home loans have significantly increased, sometimes exceeding 40% of clients' income. Recognising the impact of the combination of the macro-economicfactors and the rate hikes, Standard Bank Home Services introduced a fixed instalment solution to provide relief to home loan clients with high debt burdens.

With the South African Reserve Bank signalling this week that it will keep its firm monetary policy stance for longer – meaning that interest rights could still rise or remain elevated for some time – a fixed instalment option will cushion homeowners from further rate hikes in the period ahead, allowing them to plan and manage their finances better.

Our priority in this challenging economic climate is to support our customers, including our first-time home buyers, to safeguard their homes from the strain caused by interest rate increases, and to provide them short-term breathing space at a level they can afford and protecting them from defaulting.",” said Standard Bank South Africa Chief Risk Officer, Thabani Ndwandwe.

He explained that Standard Bank did not expect a reduction in interest rates until next year. This combined with better wage increases, will go some way to improving client affordability. However, until then, Standard Bank anticipates continued challenges for the next 12 to 18 months with improvements in macro-economic factors only expected in 2024.

To support clients during this period, Standard Bank is offering different types of relief solutions:

    •    Fixed Monthly Repayments
A monthly repayment solution which is fixed for 9 months to safeguard the home loan client against future interest rate increases in the short to medium term. While the monthly repayment amount is fixed, a client will not be penalized for paying more into the account.

    •    EasySell
EasySell is a private sale programme that enables Standard Bank clients with difficulty meeting their monthly repayments to sell their property at market-related prices and settle their home loan debt.

    •    Term Extension
This entails a loan modification by extending the remaining payment period. This lowers the monthly repayments, but also increases the overall interest on the loan.

    •    Re-Spread
This refers to the distribution of the debt owed (arrears) over the remaining term, but this results in increased monthly repayments.

    •    Debt Consolidation
Combination of multiple debts into a single and more manageable loan with a potential of a lower interest rate. This is offered to Standard Bank clients that have the bulk of their debts with the bank.
"At Standard Bank, we believe in our purpose to help our customers and the country at large to survive this, so that we can thrive as a continent after the storm has passed. While we acknowledge all the significant challenges, we truly believe in our continent and country, and it is our top priority to find positive outcomes for our clients and staff," said Ndwandwe.

“If your financial circumstances are resulting in difficulty maintaining repayments, speak to us right away. In the unfortunate event that you are simply unable to meet your home loan obligations, Standard Bank would like to assist to avoid eroding the value of your home,” said Ndwandwe.

Issued by Standard Bank