Banks announce rate cuts following SARB reduction

The cuts will bring further relief to the ordinary person on the street struggling to service debt.

A consumer paying off a house mortgage bond, car loan and credit card will stand to save hundreds of rands.

Standard Bank, First National Bank and Absa said they would drop their interest rates by 1% following the announcement by SARB governor

Tito Mboweni that the bank’s Monetary Policy Committee had decided to cut the repo rate by 100 basis points with effect from May 4.

“Standard Bank will be decreasing its prime and home loan base lending rates from 13% to 12%, also effective (on) Monday May 4, 2009,” the bank said. The change applied to both new and existing clients.

FNB said its rates would also be cut by 1%, from 13 to 12%.

“The new interest rate will be applicable to all new and existing prime-linked loans, including home loans ...” FNB CEO Michael Jordaan said.

“We continue to urge borrowers to use declining rates as an opportunity to improve their financial position.

“Where possible, customers with mortgages should maintain their payments at pre-cut levels, as this will significantly lower the overall cost of the mortgage,” he said.

Falling rates had resulted in an improvement in overall consumer indebtedness from 78% to 76%. “We expect that this figure will fall further after ... (yesterday’ s) announcement,” Jordaan said.