{"id":539168,"date":"2021-11-18T17:00:58","date_gmt":"2021-11-18T15:00:58","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=539168"},"modified":"2021-11-18T16:52:39","modified_gmt":"2021-11-18T14:52:39","slug":"how-much-more-you-will-pay-on-your-bond-after-south-africas-interest-rate-hike","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/property\/539168\/how-much-more-you-will-pay-on-your-bond-after-south-africas-interest-rate-hike\/","title":{"rendered":"How much more you will pay on your bond after the latest interest rate hike"},"content":{"rendered":"

For most homeowners with bonds, the interest rate hike announced by the Reserve Bank on Thursday (18 November) will mean paying extra on their monthly repayments.<\/p>\n

While economists were largely split on the possibility of a hike ahead of the announcement, the decision to hike the repo rate by 25 basis points to 3.75% (base home loan rate to 7.25%) will be a ‘shock’ to the economy says Samuel Seeff, chairman of the Seeff Property Group.<\/p>\n

“The SARB should have waited until next year. We are disappointed at the hawkish stance, especially since inflation has remained flat for the second month. I am of the firm view that the SARB should be taking a more aggressive approach to supporting the economy as central banks have done globally,” he said.<\/p>\n

While the economy has surprised on the upside, Seeff said the post-pandemic recovery needs more support and that consumers need the reprieve and extra disposable cash as the country heads into the traditionally busy festive season for the retail sector.<\/p>\n

Given the hike, the table below outlines what South Africans will now be paying on their monthly bonds, based on a 20-year loan.<\/p>\n

\n
\n\n\n\n\n\n\n
Value of the bond<\/th>\nOld monthly cost<\/th>\nNew monthly cost<\/th>\nChange<\/th>\n<\/tr>\n
R1 000 000<\/td>\nR7 753<\/td>\nR7 904<\/strong><\/td>\n+R151<\/td>\n<\/tr>\n
R1 500 000<\/td>\nR11 629<\/td>\nR11 856<\/strong><\/td>\n+R227<\/td>\n<\/tr>\n
R2 000 000<\/td>\nR15 506<\/td>\nR15 808<\/strong><\/td>\n+R302<\/td>\n<\/tr>\n
R3 000 000<\/td>\nR23 259<\/td>\nR23 711<\/strong><\/td>\n+R452<\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n<\/div>\n

Bullish market\u00a0<\/strong><\/p>\n

Marc\u00e9l du Toit, chief executive of estate agency Leadhome, said that the 25 basis point increase in the repo rate, announced by the SARB today will have \u2018little effect\u2019 on a bullish South African residential property market, as the prime interest rate is still significantly lower than it was than 12-18 months ago.<\/p>\n

“The property market is in an extremely positive place right now. According to our book, October sales were up more than 50% October 2021 versus October 2020, and over the same period the average number of days taken to sell a home reduced from 84 days to 48 days.<\/p>\n

“Positively, November has seen the momentum continue with buyer activity up 15% month on month from October to November.”<\/p>\n

Du Toit added that the\u00a0activity in the big metros is pretty much back to pre-Covid levels, and banks are still lending aggressively, with average bonds in October 0.2% below prime.<\/p>\n

“The sentiment from the market is upbeat, and we\u2019re seeing renewed confidence in property as a long-term investment and a vehicle to building wealth. People clearly feel more secure in their jobs and their incomes, and as business has become more sustainable, it\u2019s removed the \u2018fear factor\u2019 from investing.”<\/p>\n

\"\"<\/a><\/p>\n

The market<\/strong><\/p>\n

Pam Golding’s Residential Property Index shows that national house price inflation has eased from a peak of +5.3% in May to +4.7% in October 2021.<\/p>\n

The Western Cape is once again bucking the national trend, with house price inflation remaining elevated at +6.6% in recent months, while house price inflation has slowed to 4.2% in both KwaZulu-Natal and Gauteng in October 2021, the group said.<\/p>\n

In South Africa\u2019s major metro housing markets, house prices are up as follows:<\/p>\n