How much more you will pay for your bond this month after the latest interest rate hike

The South African Reserve Bank (SARB) has pushed the interest rates up by another 75 basis points, taking the current prime lending rate to 10.50%, effective 25 November.

Another rise in interest rates means that paying off your monthly bond just got even more difficult, with the cost of living not giving consumers any wiggle room to readjust their finances.

Governor of SARB Lesetja Kganyago said: “High inflation and weak economic growth continue to shape global conditions alongside monetary and fiscal policy responses. Russia’s war in Ukraine drags on, impairing trade and raising prices of a wide range of energy, food and other commodities.”

The most recent rate increase brings the cycle’s overall increase to eight, totalling 350 basis points since the cycle’s inception in November 2021.

Tony Clarke, the managing director of the Rawson Property Group, said that homeowners would continue to feel the pinch and have to tighten their belts as interest rates continue to climb.

Higher interest rates are expected to push into 2023, with economists noting that the hikes typically take months to have an actual effect on the economy. The period before change can take between six to nine months.

At 7.00%, the repo rate is in line with the steady state in nominal terms. However, with inflation running well-above target, the real policy rate is deemed accommodative. The MPC views the current monetary policy stance as being supportive of the economy and credit growth.

Carmen Nel, economist at  Matrix Fund Managers, said that given elevated uncertainty on the global and local inflation outlooks with concern focused on broadening pressures and the risk of inflation persistence, the SARB seems willing to take the policy stance into restrictive territory.

“As such, a further interest rate increase at the January meeting should be the base case.”

Maarten Ackerman, Citadel’s chief economist, said that the country’s rates are inextricably linked to the United States Federal Reserve. The Fed is expected to continue to hike rates into next year before slowing down. This paints a difficult picture for consumers in mid-2023, he said.

The table below shows how much more you are paying for your bond repayments today compared to last month.