Prime lending rate increase by 75 basis points

The SARB Monetary Policy Committee (MPC) on Thursday 24 November announced another interest rate hike of 75 basis points (bp), marking the third hike of this quantum in a row, and taking the cumulative hike in the current cycle to 350bp.

The repo rate is now sitting at 7.00%, with the prime lending rate at 10.50%.

According to The OOBA Home Loan Repayment Calculator, prospective bondholders can expect the following monthly repayments:

R1 000 000 - 00, R9 984 per month

R1 500 000 - 00, R14 976 per month

R2 000 000 - 00, R19 968 per month

First time buyers should not be deterred by the increase in the prime lending rate. The major banks are still granting 100% home loans and have programs in place to encourage young professionals to purchase their property. There are many tips and tricks that first time buyers can use to reduce the financial pressure of monthly bond repayments. Below are a few:

1. Having a good credit record. Banks will offer you a more favourable interest rate, often below prime if you have a good credit rating. You can improve your credit rating by having a diverse credit portfolio. There are different types of Credit, such as loans, credit cards and revolving facilities to name a few. Having and maintaining more than one type of credit facility will increase your credit rating. However, avoid over-indebting yourself.
2. Use a Bond Originator such as OOBA Home Loans. Our bond originator will apply at all the banks to secure you the best possible interest rate. If a particular bank offers a better interest rate then the bond originator will go back to the other banks and get them to offer a better or even lower interest rate. This service is free of charge.
3. Consider changing your bond repayment from a 20 year repayment period to a 25 or 30 year repayment plan. This will decrease your monthly repayments however your overall repayment of the home loan will increase.

At Seeff we can help you purchase your first home and guide you through the various finance options. Get pre-qualified with OOBA Home Loans.