How much more you will pay on your bond after South Africa’s latest interest rate hike

The South African Reserve Bank’s Monetary Policy Committee decision to hike the repo rate by 50 basis points to 4.75% – taking the prime rate to 8.25% – will make home loan finance more expensive.

“The low GDP growth outlook could potentially be further impacted by the electricity crisis, fuel and food price hikes, supply constraints and fall-out from the Russia war in Ukraine,” Seeff said. This is particularly so given the toll that persistent load shedding and the recent KwaZulu-Natal flooding are taking on the economy, he said, adding that there is also a risk of another significant hike in the fuel price in June as the government’s temporary R1.50 per litre general fuel levy subsidy ends.

For example, for a homebuyer with a bond of R1 million over 20 years, and a prime rate of 8.25%, payments will increase from R8,209 per month to R8,521.Deposit requirements are now as low as 6% to 7% with home loan finance more accessible as the banks continue competing strongly. Mortgage originator, Ooba also reports that 60% of its approved mortgage bonds in the first quarter were above the R1.5 million price level.

“We were hoping for a more moderate 25 basis point hike, but the 50-point increase wasn’t entirely unexpected,” said Tony Clarke, MD of the Rawson Property Group. “Between the weaker rand, rising international interest rates and massive fuel price hikes on the horizon – which will likely push inflation over the SARB’s 6% upper limit – there was little else the MPC could reasonably do.”

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