How to make the most of unchanged repo rate

If finding property in Johannesburg is on your agenda for 2019, then the recent news on the interest rate will certainly be pleasant ready for you, however, experts warn that you should continue to keep the champagne on ice for now.

Last year came with a number of increases, and one of those saw the interest rate raised slightly, however, at the start of 2019 there was positive news from the Reserve Bank Monetary Policy Committee, as they revealed that the repo rate would remain at 6.75%, with the prime lending rate at 10.25%.

This may have prompted celebrations for some, but experts in the industry are cautious and say that consumers need to be prepared for tough times ahead. Right now, you can opt to enjoy the breather, but by putting 0.25% of your home loan instalment away could be the smart thing to do. Taking a hold of the situation before it becomes a problem could end up saving you the stress if the repo rate is adjusted again later this year.

Another option would be to pay that amount into your home loan on top of your current instalment. This would allow you to shave off a considerable amount of instalments further down the line. Discussing this option, Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, used an example of a property worth R1.5m,

“By putting in just an extra R300 per month towards your bond, the repayment period would be shortened by over a year, saving you R130,000 – enough to buy an entry-level car. Putting in an extra R500 per month would shorten the repayment period by two years and save you around R200,000.”