The Monetary Policy Committee has been meeting this week and has decided to reduce the Prime interest rate by 1% to 12% from 13% and the Repo rate (this is the rate at which commercial banks can borrow from the Reserve Bank) has been reduced to 8.50% from 9.50%. This will have an effect on your bond if you have a Prime related mortgage. Justmoney asked our home loan specialist to work out how much this would save you in payments every month for various bonds all over a 20 year period.
- R750 000 bond = R528.67 savings per month
- R1 000 000 bond = R704.90 in savings per month
- R1 500 000 bond = R1057.34 in savings per month
These savings however will not be automatic and it will depend on your bond provider when they will lower the rates at which they charge you. Some bond providers cut at the same time as the MPC while others wait for a little while before they pass the savings created by the cut onto consumers. You will need to check with your bond provider what the actual interest rate that you are being charged is in light of the interest rate cut today.
The interest rate decision was watched by many and eagerly expected. This is what some of the papers had to say in the run up to the rate decision this afternoon. The Dispatch predicted a 100 point cut. This was based on the predictions of the economists that they interviewed, and they got it right. The article had a look at the background issues that go into formulating the MPC response to the interest rate. The MPC has been pursuing a policy of inflation targeting which has started to bring down the inflation rate. Although it only declined by a small amount in the latest figures it is declining, and the slow rate opens up the possibility of further interest rate cuts.
No comments:
Post a Comment