SARB interest rate
Governor of the SA Reserve Bank Lesetja Kganyago has announced a repo rate hike of another 50 basis points. Ouch!

The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) voted to hike interest rates by 50 basis points on Thursday, taking the country’s repurchase rate to 7.75%.

The prime lending rate will increase to 11.25%.

The changes will come into effect from Friday, 31 March 2023.

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The latest interest rate hike marks the 10th in the current cycle, with the total adjustment being a massive 425 basis points since the hike cycle started in November 2021.

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According to Reserve Bank governor Lesetja Kganyago, the vote was not unanimous, with three members voting for a 50 basis point hike and two preferring a 25 basis point move.

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On a home loan of R1 million at the new prime rate (11.25%), the latest hike will increase payments by R341 a month, while a R2 million bond outstanding with now cost R680 more each month.

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The table below shows both ‘old’ and ‘new’ monthly bond repayments on various values assuming no deposit and that repayments are at prime:

Bond value (20 years) Old monthly cost (10.75%) New monthly cost (11.25%) Change
R750 000 R7 614 R7 869 +R254
R800 000 R8 122 R8 394 +R272
R850 000 R8 629 R8 919 +R290
R900 000 R9 137 R9 443 +R306
R950 000 R9 645 R9 968 +R323
R1 000 000 R10 152 R10 493 +R341
R1 500 000 R15 228 R15 739 +R511
R2 000 000 R20 305 R20 985 +R680
R2 500 000 R25 381 R26 231 +R850
R3 000 000 R30 457 R31 478 +R1021
R3 500 000 R35 533 R36 724 +R1191
R4 000 000 R40 609 R41 970 +R1361
R4 500 000 R45 685 R47 217 +R1532
R5 000 000 R50 761 R52 463 +R1702