The prime lending rate has been raised by 0.75 basis points or 0.75% in everyday life. One basis point is equal to 0.01%. This was where the prime lending rate was pegged before the Covid 19 pandemic. In simple terms the increase equates to an extra R488 per month for every R1 000 000 of your loan. While R488 is a lot of money and will squeeze many household disposable incomes there is some good news…
Inflation appears to be stabilizing:
The Monetary Policy Committee that monitors and decides on our interest rates uses the interest rate as a means of targeting and managing inflation.
Currently our core inflation rate is relatively unchanged at 4.3% and lower than the expected 5.4%. The forecast for 2023 is now also lower at 4.8%. While the Ukraine war continues the markets are now stabilising. This is caused by factors like:
- The reopening in the export of Ukrainian products like grain.
- Russia trading oil at 30% below the market price to obtain sales. This has a deflationary effect on the international oil price. As already seen in the slight reduction in the petrol price.
The graph above shows inflation vs interest rates and predicts that our interest rates and inflation rates will stabilize. With thanks to Nicky Weimar, Nedbank’s Chief Economist and DTS for the presentation and information.
Banks are showing an increased appetite to lend.
Two banks, Absa and Nedbank, are currently offering 105% bonds. We have also just seen Investec award 100% bond on a high value sale. There is also good home loan offerings from the other banks.
The Housing Market is Positive.
Well priced houses are selling fast. We see that houses priced with in market expectations sell with in 1-4 weeks of listing and we currently have waiting lists for properties in certain areas.
You are not home alone with your home loan! We are here to help. If you have any questions, please do not hesitate to contact us