The new monthly cost of an R1 million bond, given the increase in interest rates [table]
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The new monthly cost of an R1 million bond, given the increase in interest rates [table]

Thursday, the Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) voted to increase interest rates by 25 basis points, bringing the country’s repurchase rate to 7.25 percent.

The prime loan rate will rise to 10.75 percent.

The modifications will take effect on January 27, 2023.

The most recent interest rate increase is the ninth in the current cycle, with a total increase of 375 basis points since the cycle began in November 2021.

The action was consistent with market predictions, with analysts and economists anticipating either a 25 basis point or 50 basis point increase, with the majority predicting the higher amount.

According to Reserve Bank governor Lesetja Kganyago, the vote was not unanimous, with three members favoring a 25-basis-point increase and two for a 50-basis-point increase.

On an R1 million mortgage at the new prime rate (10.75%), the recent increase will boost monthly payments by R168, while an existing R2 million bond will incur a monthly increase of R337.

The table below displays both ‘old’ and ‘new’ monthly bond repayments for various outstanding bond values with no deposit (if a new bond) and the assumption that repayments are at prime:

Bond value (20 years)

Previous monthly fee (10.5%)

New monthly fee (10.75 percent)

Change R750 000 R7 488 R7 614 +R126 R800 000 R7 987 R8 122 +R135 R850 000 R8 486 R8 629 +R143 R900 000 R8 985 R9 137 +R152 R950 000 R9 485 R9 645 +R160 R1 000 000 R9 984 R10 152 +R168 R1 500 000 R14 976 R15 228 +R252 R2 000 000 R19 968 R20 305 +R337 R2 500 000 R24 960 R25 381 +R421 R3 000 000 R29 951 R30 457 +R506 R3 500 000 R34 943 R35 533 +R590 R4 000 000 R39 935 R40 609 +R674 R4 500 000 R44 927 R45 685 +R758 R5 000 000 R49 919 R50 761 +R842


»The new monthly cost of an R1 million bond, given the increase in interest rates [table]«

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