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.
ALSO READ | DStv price hike: What you’ll pay from 1 April – it’s NO April Fool’s joke!
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.
WEALTH REPORT | South Africa ‘only’ has 37 800 DOLLAR millionaires
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.
MONEY MATTERS | FOUR of Africa’s wealthiest cities are in South Africa
WHAT DOES THE INCREASE MEAN FOR THOSE WITH MONTHLY BOND REPAYMENTS?
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.
PUZZLE | Can you solve this maths equation that has the internet baffled?
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|