Interest Rate Unchanged
The South African Reserve Bank keeps the repurchase rate at 3.5%
(Home loan base rate of 7%)
With the lowest interest rate in 50 years, most of us haven't had the opportunity to buy a house at this rate in our entire lives.
There have been some mixed emotions about the decision to keep the rate the same, some would have liked to see it drop by another 25 basis points, others are excited as it allows for more people to enter the property market.
With the home loan base rate difference from 10% to 7% means that a reduction in bond repayment saving on a R1 million property would be just short of R2000 per month and about R450,000 on the total repayment term of a 20-year bond. Saving home owners around 30% and allowing them to pay more into their home loans or pay off other debt they may have.
What would it cost for you to buy a home at the current rate? The table below gives you a general idea.
|
Bond Value |
Registration and bond costs required |
Minimum gross salary required (before tax) at 7% |
Monthly bond payment at 7% interest rate |
Total paid with interest after 20 years |
|
R850 000 |
R52 331 |
R21 966 |
R6 590 |
R1 581 621 |
|
R1 000 000 |
R55 712 |
R25 843 |
R7 752 |
R1 860 996 |
|
R1 500 000 |
R83 155 |
R38 764 |
R11 629 |
R2 791 212 |
|
R2 000 000 |
R123 107 |
R51 686 |
R15 505 |
R3 721 711 |
|
R2 500 000 |
R173 188 |
R64 608 |
R19 328 |
R4 651 927 |
It must be noted that even though the interest rate is at its lowest, purchasers should be cautious to leave some room in their budget as the interest rate could go up towards the end of 2021 early 2022.
In short if you were thinking about buying a house now would be a good time to buy and on the other end of the spectrum, if you are wanting to sell your house you now have a larger amount of new potential buyers for your property.