When does the interest rate cut (July 2017) take effect?

[czc]

As per the title when does the interest rate cut (July 2017) take effect?

I want to know if my homeloan repayment will be lower in August.

 

[Diabolix]

It applies immediately, so your next bond payment should reflect that.

 

[Kosmik]

Correct. I got a letter in the evening of the cut stipulating the new rate cut and my new bond repayment.

*HOWEVER* note that the cut is against the PRIME rate. Banks do not necessarily have to cut theirs, although most do, so it is entirely up to your provider to adjust YOUR personal rate.

 

[Jehosefat]

Correct. I got a letter in the evening of the cut stipulating the new rate cut and my new bond repayment.

*HOWEVER* note that the cut is against the PRIME rate. Banks do not necessarily have to cut theirs, although most do, so it is entirely up to your provider to adjust YOUR personal rate.

If they quoted your interest rate as "PRIME + 1%" or something similar then they do have to cut it because PRIME is a benchmark rate. The only way they can get around that is if they quoted your interest rate as "10.5%" or something similar (or if you fixed your rate).

 

[Sinbad]

Correct. I got a letter in the evening of the cut stipulating the new rate cut and my new bond repayment.

*HOWEVER* note that the cut is against the PRIME rate. Banks do not necessarily have to cut theirs, although most do, so it is entirely up to your provider to adjust YOUR personal rate.

cut is to repo, not prime. Prime generally follow suit though.

 

[Big Rat]

If your bond says Prime minus 2 or to that effect they must cut. Right?

 

[Pho3nix]

cut is to repo, not prime. Prime generally follow suit though.

Got an email saying prime was cut last week for my bank :|

 

[Kosmik]

cut is to repo, not prime. Prime generally follow suit though.

Soz thats correct. From what I know it can choose not to adjust.

 

[Sinbad]

Soz thats correct. From what I know it can choose not to adjust.

Prime is set by the banks themselves. I recall calls for the competition commission to investigate them for all colluding on the setting of the rate.

 

[Jehosefat]

cut is to repo, not prime. Prime generally follow suit though.

Yeah, but Prime = Repo + 3.5% iirc

Almost all floating rates are set by the banks and mostly its clear in the name: e.g. JIBAR = Johannesburg Inter Bank Agreed Rate, LIBOR = London Inter Bank Offered Rate etc.

 

[czc]

It applies immediately, so your next bond payment should reflect that.

Yip, it looks like it was immediate. Almost R800 bucks less per month now.

 

[Cius]

Its normally applied the following morning. The only place I know of significant delays was with people on FBT rates.

The FBT (fringe benefit tax rate) used to sometimes take a while to take effect. This is the rate that banks and the like give their employees (normally prime -2.5%). When I first got my bond there could be a couple month lag between the government changing interest rates and the new FBT rate being gazetted. However nowadays I believe even that is instant. They changed it a while back to be linked to prime to save the step.