On 2016/01/29 the South African Reserve Bank (SARB) raised the Repo Rate with 50bps to 6.75%. Prime is now 10.25%. What does that meon for consumers.
Repo Rate Change Consequences
- With the Rep & Prime Rates going up you will pay more on your bond, car finance and other loans.
- For pensioners relying on interest income, they will see an increase in income, but most of it will be eroded by inflation.
- On the news of the Repo Rate increasing the South African Rand strengthened against the major currencies, but will stay under pressure.
- Property buyers most likely will get smaller loans, and banks might look to future affordability as more repo rate increases are expected.
In short most people will have less disposable income, and some people might struggle with their debt repayments. 2016 will be a challenging year, with increases in Tax, and Electricty prices. It is time to tighten your belt and ride out the less than rosy economic situation.