INTEREST RATES ARE SET TO GO ON RISING

CURRENT and prospective home buyers must budget for further interest rate increases, advises Rhys Dyer, chief executive of the ooba Group.

This comes after last week’s rate increase set the tone for what is to be expected from the South African Reserve Bank this year.

The prime lending rate could potentially increase between 0.75% and 1% this year, Dyer says. However, he adds that a prime lending rate of 7.75% is “still relatively low” in comparison to the pre-pandemic level of 10%.

“It’s important to remember the competition between banks remains fierce and, despite the hike late last year, the average interest rate achieved for our customers (in quarter 4 of 2021) was still prime less 0.21%.”

Looking at a sliding scale of where most home loan activity takes place, Dyer notes monthly repayments on a R1 million bond (calculated over a repayment period of 20 years) will increase by just R152 a month, while those on a R1.5m bond will increase by just R228.

“A R2m bond will increase by R304 a month, while repayments on a R3m home will increase by R457.”

THE prime lending rate could increase between 0.75% and 1% this year. PICTURE: STEVE BUISSINNE/PIXABAY