Nice information for South African owners
The South African Reserve Bank’s (SARB’s) financial coverage committee (MPC) met for the ultimate time in 2024 on Thursday.
After a financially tough 12 months for a lot of, there was GOOD information for these South Africans in debt.
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The six-man committee elected to chop the rate of interest by 25 foundation factors.
That noticed the repo fee drop to 7.75% whereas the prime lending fee now stands at 11.25%.
Governor of the SARB Lesetja Kganyago confirmed that the choice was unanimous.
The information got here as an early Christmas current for these owners with month-to-month bond compensation commitments – and excellent news for these trying to enter the property marketplace for the primary time.
What does a 25 foundation level lower imply in financial phrases?
By approach of an instance (see graph beneath), following the rate of interest lower, 20-year repayments at prime (11.25%) on the common home bond in South Africa of R1 458 924 will now price R15 308 monthly to finance.
That represents a month-to-month saving of R250.
Over the course of 20 years (240 months), that equates to a complete saving of R60 000 – on the (unlikely) assumption that there aren’t any additional rate of interest modifications throughout that interval.
But listed below are the scary numbers …
To finance a R1 458 924 bond over 20 years on the new prime lending fee (11.25%) will NOT price R1 458 924.
In reality, it should price a staggering R3 673 883.
Do the sums your self:
R15 308 x 240 months = R3 673 920 (give or take a number of rands)
Monthly bond compensation desk
The South African website’s desk beneath compares the now previous month-to-month bond repayments on varied bond values over a 20-year interval assuming no deposit and repayments at prime, to the new price after the lower – and the month-to-month saving that entails:
| Bond | Old (11.5%) | New (11.25%) | Saving |
| R750 000 | R7 998 | R7 869 | R129 |
| R800 000 | R8 531 | R8 394 | R137 |
| R850 000 | R9 065 | R8 919 | R146 |
| R900 000 | R9 598 | R9 443 | R155 |
| R950 000 | R10 131 | R9 968 | R163 |
| R1 000 000 | R10 664 | R10 493 | R171 |
| R1 458 924 | R15 558 | R15 308 | R250 |
| R1 500 000 | R15 996 | R15 739 | R257 |
| R2 000 000 | R21 329 | R20 985 | R344 |
| R2 500 000 | R26 661 | R26 231 | R430 |
| R3 000 000 | R31 993 | R31 478 | R515 |
| R3 500 000 | R37 325 | R36 724 | R601 |
| R4 000 000 | R42 657 | R41 970 | R687 |
| R4 500 000 | R47 989 | R47 217 | R772 |
| R5 000 000 | R53 321 | R52 463 | R858 |
SARB MPC MEETING DATES FOR 2024
The MPC meets each second month.
| Month | Date |
| January | 25 January – No fee change |
| March | 27 March – No fee change |
| May | 30 May – No fee change |
| July | 18 July – No fee change |
| September | 19 September – 25 foundation level lower |
| November | 21 November – 25 foundation level lower |
To hire or purchase (and repay a bond): What do YOU do?
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