The recent interest rate cut offers significant savings for homebuyers. Find out what you can save when applying for a higher bond.
Summary of Key Changes
The South African Reserve Bank recently cut the interest rate from 7.75% to 7.5%, creating big savings opportunities for homebuyers. With this cut, homebuyers can save between R37,319 and R186,596 on their bonds, making it more feasible to afford higher bonds than before. A slight adjustment in the interest rate can result in significant savings, which is welcome news for potential buyers.
Now is the ideal time to apply for a home loan, and you can use our Bond Calculator to estimate your monthly payments and the savings from this recent rate change.
Understanding Interest Rates and Market Trends
In recent years, the Reserve Bank raised rates to manage inflation. However, experts predicted rate cuts might start by late 2024, which has proven accurate with this latest adjustment to 7.5%.
What Does This Mean for Homebuyers?
The recent rate cut means substantial savings and improved bond affordability. Here’s an example of potential monthly and total savings:
| Loan Value | Monthly Repayment at 11.75% | Monthly Repayment at 11.50% | Monthly Savings | Total Savings |
| R1 million | R9,753 | R9,598 | R155 | R37,319 |
| R2 million | R19,507 | R19,196 | R311 | R74,709 |
| R3 million | R29,260 | R28,794 | R466 | R111,958 |
| R4 million | R39,013 | R38,391 | R622 | R149,277 |
| R5 million | R48,767 | R47,989 | R778 | R186,596 |
For instance, if you could previously afford a R1 million bond, the recent cut could help make a R2 million bond more affordable.
Other ways to save on interest rates
- Improve Your Credit Score: A higher credit score can help you secure better rates. Banks typically consider a credit score of 610 or higher. Regularly checking your credit report, paying off debts, and keeping your credit usage low are great ways to improve your score.
- Make Extra Bond Repayments: Making extra payments, even small ones, can save you money in the long run.
- Increase Your Deposit: The more you put down upfront (typically 10-20%), the lower your interest rates and monthly payments.
- Use a Home Loan Comparison Service: With O-YES Home Loans, you can compare offers from multiple banks and find a deal with the best interest rate for you.
Get Prequalified to Know What You Can Afford
Prequalification assesses your credit and gives you a clear idea of what bond amount you can afford. This insight can guide you in deciding whether additional savings make a higher bond less risky. You can get prequalified by contacting an expert at O-YES Home Loans or using our free Bond Indicator tool.
