R303 per month saving for the average household in South Africa – with more relief around the corner

 ·30 Sep 2024

The Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) has recently cut interest rates, reducing the country’s average mortgage and bond repayments by a combined R303 per month.

The MPC cut interest rates earlier this month for the first time since 2020, which aligned with economists’ and analysts’ expectations.

Reserve Bank governor Lesetja Kganyago said that the MPC reached a consensus of a 25 basis point cut, believing that a less restrictive stance was consistent with sustainably lower inflation expectations over the medium term. Inflation hit a three-year low of 4.4% in August.

The repo rate now is 8.00%, and the prime lending rate is 11.50%.

The rate cut follows similar moves from central banks worldwide. The US Fed also decided to cut interest rates by 50 basis points when it met a day before the MPC.

South African assets have performed relatively well in recent months, strengthening the rand more than its peer emerging market economies. Meanwhile, long-term yields have moderated, and spreads over US rates have narrowed.

Kganyago said that the Reserve Bank’s forecast shows rates moving towards neutral territory next year, stabilising slightly above 7%. This implies that another 75-100 basis point cuts are approaching for South Africa.

In the meantime, South African households can expect a R303 cut in their debt repayments for their houses and cars.


Home loans

As every bond differs, we have decided to look at the possible savings that a 20-year bond with no deposit and a prime interest rate will receive following the latest cut.

The latest data from ooba Home Loans showed that the average house in South Africa costs R1,458,924.

With the price drop, the bond repayment for the average house dropped from R15,810 per month to R15,558 per month – a saving of R252 per month.

The savings on bonds for properties prices between R750,000 and R5 million can be found below:

Value of the bond (20 years)Jul 2024 (11.75%)Sep 2024 (11.50%)Change
R750 000R8 128R7 998-R130
R800 000R8 670R8 531-R139
R850 000R9 212R9 065-R147
R900 000R9 753R9 598-R155
R950 000R10 295R10 131-R164
R1 000 000R10 837R10 664-R173
R1 458 924 (average)R15 810R15 558-R252
R1 500 000R16 256R15 996-R260
R2 000 000R21 674R21 329-R345
R2 500 000R27 093R26 661-R432
R3 000 000R32 511R31 993-R518
R3 500 000R37 930R37 325-R605
R4 000 000R43 348R42 657-R691
R4 500 000R48 767R47 989-R778
R5 000 000R54 185R53 321-R864
Using ooba’s calculator

Car Loans

Like home loans, the terms of a car loan depend on several factors, so we have looked at the value of a loan with no deposit or trade-in and a prime-linked interest rate over a 60-month term.

WesBank said the average amount for a new vehicle it finances was approximately R410,000. 

With the latest cut in interest rates, the average South African car purchaser would thus save R51 monthly on car repayments.

The savings on vehicles following the latest interest rate decrease can be seen below:

Value of the carJuly Rate (11.75%)Sep Rate (11.50%)Change
R175 000R3 966R3 944-R22
R200 000R4 519R4 494-R25
R225 000R5 072R5 043-R29
R250 000R5 625R5 593-R32
R275 000R6 178R6 143-R35
R300 000R6 731R6 693-R38
R350 000R7 837R7 793-R44
R400 000R8 943R8 893-R50
R410 000 (Average)R9 164R9 113-R51
R450 000R10 049R9 992-R57
R500 000R11 155R11 092-R63
R550 000R12 261R12 191-R70
R600 000R13 367R13 291-R76
R650 000R14 473R14 391-R82
R700 000R15 579R15 490-R89
R750 000R16 684R16 590-R94
R800 000R17 790R17 689-R101
R850 000R18 896R18 789-R107
R900 000R20 002R19 888-R114
R950 000R21 108R20 988-R120
R1 000 000R22 214R22 088-R126
Using Wesbank Finance Calculator

Read: Big companies closing down in South Africa – but some buyers see a bargain

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