Repo Rate Up
For the second time this year the Monetary Policy Committee has raised interest rates by adjusting the repo rate by another 25 points. This means that the rate at which the central bank lends money to the commercial banks (Like FNB, ABSA, Capitec, Standard & Nedbank) is now 6.25%. SA Reserve Bank Governor Lesetja Kganyago made the announcement this week after a meeting of the committee.
The banks in turn use the formula given them by the DTI regulations to work out what they are allowed to charge you. This is normally done at the maximum allowed rate for most clients. Recently the DTI published a new way these maximum fees will be worked out making it easier to understand what the effect on your monthly debt repayments will be. Those changes will come into effect half way through next year.
So, while at the moment the current formulas often have things being multiplied by 2.2 and can be a bit tedious to work out, the main number you should be aware of is that the Prime Lending Rate sits at 9.75% Basically this means you will be paying more for the credit agreements you have.
If you are already struggling to keep up with debt repayments then now might be the time to go talk to a professional Debt Counsellor to see how you could reduce your monthly debt repayments.