Two of the country’s major banks have announced that they will be reducing their lending rates after the SA Reserve Bank announced it was cutting its repo rate by 50 basis points to 5 percent.
Standard Bank said its prime lending rate will decrease from 9.00 percent to 8.50 percent effective from Friday 20 July 2012. The Home Loan base rate will also decrease by 0.50 percent from 9.00 percent to 8.50 percent with effect from Friday 20 July 2012.
These rate changes are applicable for both new and existing clients.
First National Bank (FNB) will also cut its prime lending rate by 0.5 percent from 9.0 percent to 8.5 percent. The new interest rate will be applicable to all new and existing prime linked loans including home loans‚ from Friday 20 July 2012.
“While very few commentators forecast a rate cut today‚ the announcement indicates the nature of the tightrope being walked by the Reserve Bank. It shows a strong desire by the monetary authorities to boost job creation while not spurring consumers into additional debt. I urge consumers to take this opportunity to reduce their debt levels‚” says Michael Jordaan‚ CEO of FNB.
“I would not encourage consumers to take on new loans simply because the interest rate environment is benign. Economic conditions will remain tight through 2012 and consumers should be wary of new expenses. South Africa’s primary trading markets in Europe‚ North America and China have shown signs of slowing demand‚” adds Jordaan.
FNB offers assistance in the form of a Debt Remedy facility from FNB Home Loans and a Special Repayment Arrangement offered by FNB Card.