Nedbank and FNB hold off rate cut until Monday

[semiautomatix]

Its just a different and get calculated at different time (aka every 3 months in my case). And doesn't get announced media wide.

Here is what it says on my statement so far since the purchase regarding the rates:

Date Rate Instalment
18/07/2008 14.000% Rxxxx.xx
20/10/2008 13.900% Rxxxx.xx
19/01/2009 13.100% Rxxxx.xx
20/04/2009 Next Rate Change

How your SA Home Loans rate is calculated:
JIBAR 91 day Discount Rate 11.300%
Converted to monthly yield and rounded up 11.400%
Plus SA Home Loans margin 1.700%
SA Home Loans mortgage rate 13.100%

You'd have to see how much the bond transfer costs would be, probably cheaper to just those pump those costs into the homeloan as it is...

So since I have prime -2% it wouldn't seem worth the change?

 

[supersunbird]

Nope, since your interest rate is 12% and is thus quite good...

 

[kingmonty]

Is that when they altered the payment or when they reduced the interest you are paying?

The payment came down then, which means that unlike ABSA and I think Std Bank, there was no prorata reduction for the December period immediately following the MPC rates reduction.

 

[noxibox]

The payment came down then, which means that unlike ABSA and I think Std Bank, there was no prorata reduction for the December period immediately following the MPC rates reduction.

If money is tight then I can see this being an issue, otherwise in the long run they're actually doing you a favour keeping the payment unchanged. I certainly understand that for many people they need the financial relief right now.

 

[kingmonty]

If money is tight then I can see this being an issue, otherwise in the long run they're actually doing you a favour keeping the payment unchanged. I certainly understand that for many people they need the financial relief right now.

How is it a favour? If you're implying that the additional funds is used to offset the interest paid over the long term then I'm afraid you're mistaken, as the interest is calculated at their ruling rate - which at the time means the interest rate taken into effect is calculated in the following cycle. So the bank pockets the difference, and you don't get any benefit.

 

[Turbo_Aspiration]

How is it a favour? If you're implying that the additional funds is used to offset the interest paid over the long term then I'm afraid you're mistaken, as the interest is calculated at their ruling rate - which at the time means the interest rate taken into effect is calculated in the following cycle. So the bank pockets the difference, and you don't get any benefit.

I dont think that is correct. I recently paid a small (but significant) lump sum into my bond. I could see the daily interest charged coming down a bit. Obviously this lead to less interest being tagged on at the end of the month (I made the payment mid-month).

However, the amount automatically deducted from my account (the re-payment) still hasn't changed. I think they do a readjustment every few months and, perhaps, on your request.

 

[kingmonty]

I dont think that is correct. I recently paid a small (but significant) lump sum into my bond. I could see the daily interest charged coming down a bit. Obviously this lead to less interest being tagged on at the end of the month (I made the payment mid-month).

However, the amount automatically deducted from my account (the re-payment) still hasn't changed. I think they do a readjustment every few months and, perhaps, on your request.

Correct, your lump sum adjusts the capital amount. However, when the repo rate is adjusted, the bank can keep their prime interest rate for its current homeloan clients on the higher interest rate as long as it wants (which is exactly what Nedbank did in the last cycle with myself and tim).

There was no benefit passed on to me. Your lump sum payment changed the capital amount meaning your loan term is shortened. You pay the same rate of interest, irrespective of the amount left to go, so you basically enjoy a savings advantage as your loan term was lowered, thus meaning you will pay less in the end. Interest is a cost and goes to the bank anyway, and the pro-rata adjustment by some banks are passed on to the clients.

The other banks do not adjust their interest for those clients until the start of the next cycle, therefore their costs are the same and they effectively profit against the repo rate coming down. It's not really something to be frowned upon as it is their right, however as some banks do pass the benefit on to their clients it may well be construed as a bit unfair, but then again, who really wants to go through the schlep of moving a bond, let alone in my case 5.

 

[MielieSpoor]

When the rates was dropped in December, my vehicle finance with Standard Bank only showed the rate cut for the debit order of end January. When the debitorder of end December went through, I still payed interest of before the rate cut took place. I will have a look now at the end of the month, and if they didn't adjust it, I will make sure they adjust it!

 

[noxibox]

If you're implying that the additional funds is used to offset the interest paid over the long term then I'm afraid you're mistaken, as the interest is calculated at their ruling rate - which at the time means the interest rate taken into effect is calculated in the following cycle. So the bank pockets the difference, and you don't get any benefit.

I did ask you whether it was at that point that they adjusted your interest rate or your payment.

 

[noxibox]

When the rates was dropped in December, my vehicle finance with Standard Bank only showed the rate cut for the debit order of end January. When the debitorder of end December went through, I still payed interest of before the rate cut took place.

In my case the payment is only adjusted at a later date, but I can see that the interest rate has been adjusted shortly after the official rate change. So in effect I have at least one payment that is higher than it needed to be thus reducing the capital amount owed.