Comments from local business owners stated they were disappointed because the repo rate hike would have an impact on consumers, homeowners and homebuyers. The impact from banks will be the implementation of firmer lending regulations and increasing repo rates, which might have a damaging effect on people’s bond repayments.
“This increase is not the end of the world though… I agree that less people are going to get credit or loans from financial institutions, but when we look at the history of the repo rate, it is still not as high as it had been in 1998 – when it was at its highest ever at 24%,” says Wikus Olivier, debt management expert at DebtSafe.
“We are amid an interest rate hike increase cycle and therefore we’ll be seeing more increases before it will stabilize or decrease,” Olivier warns.
Olivier says government uses interest rates to manipulate the economy. Mortgages, credit cards and other consumer loan interest rates are calculated, based on the prime rate. “If a person has equity in an access bond and a lot of other debt, use the money from the access bond to pay all outstanding debt while the interest rates are still relatively low,” he advises.