My fellow South Africa dwellers it looks like we are approaching a 5 year-peak in interest rate charges next month. What makes this particularly noteworthy (incase you were not bothered) is the fact that the repo rate may go up by 2% in one go.
To put things into perspective. If you bought a house for R500, 000 back in 2006 around July and the bank gave you an interest rate of 10.5% (i.e. the prime lending rate then), and you took the bond over 20years then you would have been paying the bank R4,991.90 per month.
So two years later, Today, you are paying the same bond but alas, the prime lending rate is 15% which means that you are paying R6,583.9. This is a whole R1,592.05 every month extra that you did not foresee. And petrol? food?
But wait for the punch-line! If things go as Tito Mboweni stated while talking to Bloomberg we are going to receive an early Youth day present of 2% hike. This means the repayments for the same bond will now be R7,334.00.
In English, this means in a month and a bit’s time you will be R750 poorer and R2342.1 from when you bought this house two years ago.
Picture by razzlefrazzle
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