The choice late final month by the South African Reserve Financial institution’s (SARB’s) financial coverage committee (MPC) to chop rates of interest by 25 foundation factors got here as welcome information to these South Africans in debt.
For the most recent finance information, bookmark The South African web site’s devoted part for free-to-read content material
After a financially tough yr for a lot of, there was some excellent news forward of the festive season.
The choice by the six-man committee was unanimous and noticed the repo fee drop to 7.75% whereas the prime lending fee now stands at 11.25%.
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.
Nevertheless, whereas the information was seen as ‘good’ by these in debt, warning must be exercised on the identical time.
“Rate of interest cuts typically spur client confidence. A 25% fee reduce could also be perceived as useful for South African shoppers. Whereas it encourages folks to spend extra and even contract extra loans because of the decrease rates of interest, on the identical time, maintaining rates of interest too low for too lengthy could injury the financial system in the long term”, mentioned Terence Hove, Monetary Markets Strategist Advisor at Exness.
Whereas many owners have been hopeful of a 50 foundation level reduce, that might effectively change into a actuality on the subsequent assembly on Thursday, 30 January 2025.
What does a 25 foundation level reduce imply in financial phrases?
As specified by the desk beneath, the saving after the most recent announcement varies relying on the bond determine.
For a bond of R500 000, the saving is ‘solely’ R84 monthly – or R20 160 over the total 20-year compensation interval.
Nevertheless, for a bond of R5 million, that saving rapidly ramps as much as R858 monthly – or R205 920 over the total length.
In instances like these, each cent counts!
Month-to-month bond compensation desk
The South African web site’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 rate of interest reduce – and the month-to-month saving that entails:
| Bond | Outdated (11.5%) | New (11.25%) | Saving |
| R500 000 | R5 330 | R5 246 | R84 |
| 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 2025
| Assembly month | Date |
| January | 30 January |
| March | 20 March |
| Could | 29 Could |
| July | 31 July |
| September | 18 September |
| November | 20 November |
To lease or purchase (and repay a bond): What do YOU do?
Tell us by clicking on the remark tab beneath this text or by emailing information@thesouthafrican.com or sending a WhatsApp to 060 011 021 1
Subscribe to The South African web site’s newsletters and comply with us on @TheSAnews on X and The South African on Fb for the most recent information.
