South African rand

Rand exchange rate against FIVE major currencies after South Africa election. Image: Pixabay.

Interest rate hike: How much more your BOND will cost every month [table]

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

South African rand

Rand exchange rate against FIVE major currencies after South Africa election. Image: Pixabay.

The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) shockingly voted to hike interest rates by 50 basis points on Thursday.

That decision took the country’s repurchase rate to 7.75% while the prime lending rate rose to 11.25%.

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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 shift.

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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.

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The table below shows both ‘old’ and ‘new’ monthly bond repayments on various bond 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 000R7 614R7 869+R254
R800 000R8 122R8 394+R272
R850 000R8 629R8 919+R290
R900 000R9 137R9 443+R306
R950 000R9 645R9 968+R323
R1 000 000R10 152R10 493+R341
R1 500 000R15 228R15 739+R511
R2 000 000R20 305R20 985+R680
R2 500 000R25 381R26 231+R850
R3 000 000R30 457R31 478+R1 021
R3 500 000R35 533R36 724+R1 191
R4 000 000R40 609R41 970+R1 361
R4 500 000R45 685R47 217+R1 532
R5 000 000R50 761R52 463+R1 702