Interest Rates Increased By 0,5% - R331 p.m. Extra Per R1 million Bond

SA Reserve Bank governor Lesetja Kganyago announced on Thursday that the repo rate has been increased by 50 basis points to 6.75%. The prime lending rate, the figure charged by banks to customers, will increase to 10.25%.

The repayment on a R1 million home loan over a 20 year period will now cost the homeowner an additional R331 a month. On a 20 year home loan of R1 million, the monthly installment has risen by R1 138 per month since January 2014.

This decision by the Monetary Policy Committee is likely to create a dampening effect on housing demand as consumers are already exercising a more conservative approach to both buying and selling. The affordable and middle-income sector is likely to feel the effect most and obtaining credit will likely become tougher for first time buyers.

It is now very important for both buyers and sellers not to panic - but to price realistically and to accept that deals will almost inevitably close with some degree of price discomfort for both buyers and sellers.

It is also important for home buyers need to look ahead and budget for the additional costs they may face once they become homeowners.

Source:  Julia Hinton/Property24