Don’t lose your head after repo rate decision

The incredible opportunities when looking at property in Fourways was evident throughout last year, but the tough economic conditions made it difficult for a lot of people to take advantage. When browsing the news listings on the Private Property website, you would have been well informed as to all of the issues affecting the market.

At one point late last year, after a constant barrage of increases, people had to deal with a change to the repo rate, which pushed some budgets over the edge. It could have gotten worse at the start of 2019, but there was relief to hear that the Reserve Bank Monetary Policy Committee had decided to keep the rate on hold.

This was a decision backed by experts, with the repo rate being kept at 6.75% and the prime lending rate at 10.25%. However, they also warn consumers to remain cautious, as this decision does not mean that things will remain the same for the foreseeable future.

Their advice is to consider taking an extra 0.25% of your home loan instalment anyway and drop it into a savings account. This way, if there is a change later in the year, you will have the funds available to deal with the increase. Alternatively, you could also make use of the funds in an emergency.

Another option would be to plough that cash straight into your home loan, and that would have a positive long-term impact on your repayment. Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, goes into this option further by using a property worth R1.5m as an example.

“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.”