In a bid to curb consumer spending and household debt the South African reserve bank announced on 0.5% hike in interest rates. This is the fourth interest rate hike for 2006 bringing the current prime rate up to 12.5%
HOW DOES THIS AFFECT YOUR HOME LOAN?
Repayments on a bond of R750 000 would have been about R7 487 before June 2006 when the first rate hike occurred in four years. Based on the current prime interest rate of 12.5% repayments on this bond amount would be about R8 521.
According to Gavin Opperman, Absa home loans managing executive , a rule of thumb was that each 0.5% increase in interest rates added about R35 to the monthly repayment for every R100 000 borrowed.
The big question is whether this will be the last in the series or whether further moves can be expected in February or April?
Experts predict that if consumers fail to control their spend habits rates will increase by at least 1% in 2007.
HOW TO BEAT THE INTEREST RATE HIKE:
Check out some of the tips weâ€™ve covered previously on how you can lower you monthly bond repayments in a time of rising interest rates.