The last few months have been tough on the pockets of South Africans, and it’s about to get even tougher. Homeowners had been bracing themselves for a repo rate increase, something that is expected after each Monetary Policy Committee (MPC), but a hike of more than 0.25% has left many reeling.
According to IOL, economists started sounding the alarm bells early on, estimating that there could be a possible 0.5% increase, but even they have been left shocked by the news.
Unfortunately, this does not bode well for homeowners, present and future as the prime lending rate will increase to 8.25%. This will mean that homeowners will now need to empty their pockets even further when it comes to home loan repayments.
Soaring electricity and fuel costs which have lead to a climbing inflation are just a few of the main reasons the South African Reserve Bank (SARB) has pinpointed as the reason for the increase in the repo rate by 50 basis points, as er EWN.
The shocking announcement was made on Thursday by Reserve Bank Governor Lesetja Kganyago.
“The bank’s forecast of headline inflation for this year is revised higher to 5.9% [from 5.8%], primarily due to the higher food and fuel prices.”
South Africans with bonds and credit cards will be paying a lot more for their debt as the bank attempts to curb inflation.
While SARB attempted to cushion the blow of the COVID-19 pandemic by offering considerable relief with a series of decreases, the conflict between Ukraine and Russia, higher electricity and fuel have reportedly changed things.
While the increase was something that many expected, it will still deal a heavy blow to those trying to work themselves out of debt.
The monetary policy committee would continue to monitor inflation and take further steps if needed.