Home loans: Impact of interest rate hike

Your next instalment will reflect latest increase

The latest interest rate increase brings to an end a remarkable run of six consecutive reductions since November 2019, when it dropped from 10% to 9.75%. The prime lending rate, being at a historical low, saw all borrowers benefiting by reducing the cost of servicing the interest charge linked to their loans.

In recent years, the South African economy has been through a lot; from credit rating agency downgrades, the global recession and the unprecedented impact of a global pandemic. These are some of the factors that contributed to the reasons why the South African Reserve Bank chose to reduce rates over a prolonged period. However, the pressure of consumer price inflation and the need for government to borrow more to fund its expenditure, has meant that increasing the interest rate is key to curbing runaway inflation and to attract outside investment capital...

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