How much your bond payments will be after interest rate hike [table]

The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) voted to hike interest rates by 25 basis points

on Thursday, taking the country’s repurchase rate to 7.25%.

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The prime lending rate will increase to 10.75%.

The changes will come into effect from Friday, 27 January 2023.

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The latest interest rate hike marks the ninth in the current cycle, with the total adjustment being a massive 375 basis points since the hike cycle started in November 2021.

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The move was in line with market expectations, with analysts and economists anticipating a 25 basis point or 50 basis point hike although most forecast the latter.

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According to Reserve Bank governor Lesetja Kganyago, the vote was not unanimous, with three members voting for a 25 basis point hike and two preferring a 50 basis point move.

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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 (10.75%), the latest hike will increase payments by R168 a month, while a R2 million bond outstanding with now cost R337 more each month.

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The table below shows both ‘old’ and ‘new’ monthly bond repayments on various outstanding bond values with no deposit (if a new bond) and assumes repayments are at prime: