The South African Reserve Bank’s (SARB’s) monetary policy committee (MPC) met for the final time this year on Thursday, 21 November.
And after a financially difficult year for many, there was GOOD news for those South Africans in debt.
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The committee cut the interest rate by 25 basis points.
That saw the repo rate drop to 7.75% while the prime lending rate now stands at 11.25%.
Governor of the SARB Lesetja Kganyago confirmed that the decision was unanimous.
The news came as an early Christmas present for those homeowners with bond repayment commitments – and good news for those looking to enter the property market for the first time.
What does a 25 basis point cut mean in monetary terms?
By way of an example (see graph below), following the interest rate cut, 20-year repayments at prime (11.25%) on the average house bond in South Africa of R1 458 924 will now cost R15 308 per month to finance.
That represents a monthly saving of R250.
Over the course of 20 years (240 months), that equates to a total saving of R60 000 – on the (unlikely) assumption that there are no further interest rate changes during that period.
But here are the scary numbers …
To finance a R1 458 924 bond over 20 years at the new prime lending rate (11.25%) will NOT cost R1 458 924.
In fact, it will cost a staggering R3 673 883.
Do the sums yourself:
R15 308 x 240 months = R3 673 920 (give or take a few rands)
Monthly bond repayment table
The South African website’s table below compares current monthly bond repayments on various bond values over a 20-year period assuming no deposit and repayments at prime, to the potentially new cost after this month’s expected 50 basis point cut – and the monthly saving that would entail:
| Bond | Old (11.5%) | New (11.25%) | Saving |
| R750 000 | R7 998 | R7 869 | R129 |
| R800 000 | R8 531 | R8 394 | R137 |
| R850 000 | R9 065 | R8 919 | R146 |
| R900 000 | R9 598 | R9 443 | R155 |
| R950 000 | R10 131 | R9 968 | R163 |
| R1 000 000 | R10 664 | R10 493 | R171 |
| R1 458 924 | R15 558 | R15 308 | R250 |
| R1 500 000 | R15 996 | R15 739 | R257 |
| R2 000 000 | R21 329 | R20 985 | R344 |
| R2 500 000 | R26 661 | R26 231 | R430 |
| R3 000 000 | R31 993 | R31 478 | R515 |
| R3 500 000 | R37 325 | R36 724 | R601 |
| R4 000 000 | R42 657 | R41 970 | R687 |
| R4 500 000 | R47 989 | R47 217 | R772 |
| R5 000 000 | R53 321 | R52 463 | R858 |
SARB MPC MEETING DATES FOR 2024
The MPC meets every second month.
| Month | Date |
| January | 25 January – No rate change |
| March | 27 March – No rate change |
| May | 30 May – No rate change |
| July | 18 July – No rate change |
| September | 19 September – 25 basis point cut |
| November | 21 November – 25 basis point cut |
To rent or buy (and pay off a bond): What do YOU do?
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