Westrand Real Estate - The Interest Rate Lingo

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The Interest Rate Lingo

Current Prime Interest Rate = 9.0%

What is a Fixed Rate vs Variable Rate:
The interest rate on a fixed rate home loan does not change.

The advantage of this is that you are protected from rate increases and your monthly payments are consistent. The disadvantage is that you will not benefit when the prime rate is dropping.

The fixed rate will usually be slightly higher than the prime rate at the time of your application.

The variable rate means that your repayment amount will increase or decrease with the prime rate.

What is a prime rate?
The rate at which the bank is currently lending.

Repo Rate vs Prime:
The Repo rate (repurchase rate) is the rate at which the Reserve Bank lends rands to our local banks.  This rate is usually 3.5% lower than the current prime rate.

Jibar Rate vs Prime:
The Jibar rate (jhb interbank agreed rate), is used by SA HOME LOANS, while the Prime rate is used by the Major Banks (STD, ABSA, FNB and Nedbank).