Increase costs almost R400 More
The 0.5% rise in the interest rate means the average household will have to pay R394.18 a month more on their debts, says Justmoney.co.za.
Justmoney.co.za, South Africa's online guide to money, says that on a R1 000 000 mortgage over 20 years at prime -2%, a 0.5% increase in the interest rate will mean having to pay R357.99 more just to service the mortgage. If you have a five year R100 000 car loan on a VW Polo for example, you will pay R26.96 more a month, whilst R30 000 personal loan on prime +15% over five years, will cost R9.23 extra and month.
Justmoney.co.za warns consumers not ignore the lower than expected interest hike and not bury their heads in the sand if they are struggling to cope financially. If borrowers have repayment problems, they need to inform their bank immediately, and consider undergoing debt counselling.
Paul Beadle, MD of Justmoney.co.za said: "People are struggling already to meet their debt obligations, so an increase of this size is bound to push many people over the edge into over-indebtedness.
"If borrowers can no longer meet the debt repayments, it is crucial that they do not bury their heads in the sand and ignore the problem. If people have payment problems they must contact their bank or lender immediately to explain the situation, and then consult a debt counsellor. If they skip their payments, this could result in their homes, vehicles and personal belongings being repossessed."
On a prime mortgage of R 500 000, the 0.5% increase means you will pay R92.73 extra a month.
If you own a R 70 000 Toyota Tazz, on prime plus 2%, you will now pay R 18.87 more a month. The cost of a R 15 000 loan, on prime plus 10% over five years, has increased by R4.41.