The interest rate war between the banks over fixed rate home loans is hotting up with First National Bank undercutting its competitors on two rates and equalling them on one.
The war is a precursor of a widely predicted cut in interest rates before the end of the year.
This week Chris Stals, governor of the Reserve Bank, who sets interest rate policy, indicated that he may be prepared to give you some relief before the end of the year if the inflation rate stays down.
The banks are unlikely to move on the popular variable interest home loan rates, which move up and down in tandem with other interest rates, until Stals moves to cut the bank discount rate at which the Reserve Bank lends money to commercial banks.
In the meantime, home owners can opt for lower fixed home loan interest rates but you are then tied in for fixed periods, even if interest rates drop to a lower level.
Be aware if you opt for a fixed interest that some banks charge you a punitive penalty if you break the contract, for example, by repaying the loan early.
Last month a number of other banks including Standard Bank, Absa Bank, Nedbank and Permanent Bank announced lower fixed interest rates on home loans.
First National Bank is now offering a fixed rate of 17,75 percent over 12 to 23 months and 17,5 percent for 24 months
Derek Price, FNB general manager: property finance, says the rates are applicable to borrowers applying for new loans as well as to existing bondholders who want to convert to the fixed rate option.
Those home owners already on fixed rates will be able to apply when their current contracts expire.
Absa has offered bond-holders a drop in fixed rates on home loans of more than R100 000 from the current 19 percent to 18,2 percent for a 12-month period and from the current 18,5 percent to 18,25 percent for a 24-month period. A new 18-month rate of 17,6 percent has also been introduced.
Nedbank and Permanent Bank are offering 18 percent on 12- and 24-month fixed periods and a new 18-month fixed rate of 17,5 percent.
Standard Bank is offering a fixed interest rate of 18,2 percent for one year; 17,8 percent for 18 months; and 18,5 percent for two years.