National bond originator, Bondspark, says that the savings associated with the recent repo rate cut from 6,25% to 5,25% by the South African Reserve Bank (SARB), should not be squandered.
CEO, Marcél du Toit, advises bondholders to, where possible, keep the bond amount at its original amount and opt to pay the debt off more quickly: “While we acknowledge that for some the debt reprieve is much needed, we are urging those customers who can save, to act wisely. One idea is to save the amount by keeping the bond repayment amount the same.”
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For prospective homebuyers, the current volatility of the market will offer much room to negotiate: “The lower interest rates may result in buyers being able to afford their dream home; while for others it could mean losing the property due to bad debt,” says Du Toit.
For prospective buyers, Du Toit says that Finance Minister Tito Mboweni’s recent announcement regarding transfer duty will also assist: “The fact that transfer duty does not apply to the first R1 million on property purchases is a significant benefit for first-time buyers. While the economy is volatile, there are many positives for anyone looking to buy a home. We are confident that these measures will assist in giving the market a much-needed boost.”
On an R1,2 million bond, Du Toit advises the monthly savings is approximately R777 per month. An overall saving, after 20 years, of R186 641.
| Based on a 1% change in interest rate | |||
| Home loan value | Saving per month | Total saving* | |
| R 250 000 | R 162 | R 38 884 | |
| R 500 000 | R 324 | R 77 767 | |
| R 750 000 | R 486 | R 116 651 | |
| R 1 000 000 | R 648 | R 155 535 | |
| R 1 250 000 | R 810 | R 194 418 | |
| R 1 500 000 | R 972 | R 233 302 | |
| R 1 750 000 | R 1 134 | R 272 186 | |
| R 2 000 000 | R 1 296 | R 311 069 | |
| R 2 500 000 | R 1 620 | R 388 837 | |
| R 3 000 000 | R 1 944 | R 466 604 | |
| R 3 500 000 | R 2 268 | R 544 372 | |
| R 4 000 000 | R 2 592 | R 622 139 | |
| R 5 000 000 | R 3 240 | R 777 674 | |
| * over 20 year home loan term |