Here's how much each interest rate cut has saved you
Following the latest interest rate cut, purchasing real estate has never been more enticing. At the current prime lending rate of just 7%, homeowners can end up spending less on their monthly bond instalments than they would in rent.
“Not only does this cut make it more affordable for buyers to enter the market, but it also makes it easier for existing homeowners to keep up with their monthly repayments. This is beneficial to everyone as it will hopefully reduce the amount of homes that will have to be repossessed and sold at public auction, which safeguards against further downward pressure on asking prices,” explains Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
To get an idea on how much a homeowner stands to save on their existing home loan, Goslett recommends that homeowners use BetterBond’s Additional Payment Calculator that can be found on their website. Based on this calculator, if homeowners kept their bond repayments on a R1 million home loan at the same amount as they were when interest rates were at 9.75%, they will save R304,000 on interest and shorten the loan by 6.25 years at the current 7%.
The table below provides a few more examples of what homeowners stand to save following the interest rate cuts:
“For those who can afford to do so, there really has never been a better time to enter the market than right now. I would just advise buyers to leave room in their budget for if and when the interest rates return to pre-lockdown levels. For existing homeowners, if it is within their budget, I would recommend keeping the repayment as it was before the cut. This is one of the best ways to save money and, if you have an access bond, it is also a great way to have access to emergency funds if you later come to need them,” Goslett concludes.