‘Rate hike will hurt indebted consumers’

THE RESERVE Bank’s latest rate hike of 25 basis points will leave consumers with less jingle in their pockets this festive season, say experts.

After its monetary policy committee met yesterday, the bank announced interest rates would increase 25 basis points, bringing the repo rate to 6.25 percent and the prime lending rate to 9.75 percent.

Estate agents and lenders predicted the rate rises would hurt consumers and homeowners, with the poorest hardest hit.

Seeff Property Services chairman Samuel Seeff said: “The hike means that a homeowner with a 20-year housing loan of around R1 million will now see their monthly repayment increase from about R9 787 to R9 959. While we expect the housing market to absorb the hike, there will no doubt be an impact.”

Rhys Dyer, the chief executive of home loan originator ooba, said: “My advice to prospective buyers is to afford themselves some breathing room… because we believe further rate increases are on the cards for next year.”

Lew Geffen, the chairman of Lew Geffen Sotheby’s International Realty, said this was a double-whammy for cash-strapped home owners.

Ian Wason, the chief executive of DebtBusters, said: “The pleasant sounds of Jingle Bells playing in our favourite store is now an alarm bell for credit-active consumers who get caught up in this year’s festive season shopping frenzy.”

Neil Roets, the chief executive of debt management firm Debt Rescue, said the combination of drought in prime food producing areas, the increase in interest rates and a rapidly weakening rand would have dire consequences for poor people.

Economist Dawie Roodt said consumers should attempt to reduce their debts by paying off items such as credit card debt which carries high interest rates.