How much you’ll save on your home loan
The Reserve Bank has cut interest rates by 0.25 percentage points, amid indications that international oil prices could fall further and that slowing global growth could prompt a round of rate cuts by most major central banks.
The repo rate is the benchmark interest rate at which the Reserve Bank lends money to other banks. Changes in the repo rate affect the prime lending rate, which is the lowest rate at which banks start lending to clients. With the repo rate down, the prime lending rate will decline to 10% from 10.25% and will translate, into a saving of R16 a month per R100 000 borrowed for existing homeowners.
“Today’s announcement that the South African Reserve Bank has dropped the repo rate bodes well for the property market,” says Sandy Walsh, MD Property.CoZa South Africa. “We have been waiting for a positive announcement like this and trust that this cut will bring some relief to our lacklustre market and stimulate buyer interest. More importantly, the cut may assist new bond applicants to achieve their qualification amount, known as gross household income. An applicant seeking a R1 000 000 bond, providing income of R33 000, should meet the gross household income criteria. If a bond holder has a loan of R1 000 000, this repo cut will save R166 each month. This may not seem much, but over 15 years this adds up to R29 880!“ says Walsh.