The South African Savitngs Insutute (SASI) is urging consumers to continue savings efforts even with the recent rise in Interest rates. Interest rates will increase by 25 basis points from 1 August, South African Reserve Bank (Sarb) governor Lesetja Kganyago announced last week.
He made the revelation following a three-day Monetary Policy Committee (MPC) meeting in Pretoria.
The decision means the repo rate, the interest charged by Sarb to banks, will rise to six percent. The prime lending rate, the interest charged by banks to customers, will jump to 9,5 percent.
“To a person on the street with a R1 million rand home loan who was paying interest at the old prime rate, this will represent an increase of R162.64. This will mean that all interest bearing debt without fixed rates will increase. This will put further pressure on consumers struggling to save. The only saving grace is that micro loans and personal loan often have fixed rates which don’t change immediately.” Says Gerald Mwandiambira, of The South African Savings Institute. “The challenge when rates go up is the knock on effect on all other expenses such as food and transport as transport providers often finance vehicles.”
Despite challenges posed by rising interest rates and inflation, saving must remain at the heart of all financial planning. This all starts by having a personal budget to ensure that one can live within their means and identifying any areas where there are potential savings to be made. SASI continues to urge saving as a lifestyle beyond the current Savings Month which ends this week.
SASI PRESS RELEASE