In an online poll conducted on South African's guide to money, Justmoney.co.za's users revealed that South Africans seem to be taking advantage of this year's rate cuts particularly well. While the dropping of interest rates seems to have subsided for the time being, an effective 4.5% drop in rates since December last year has meant that a number of South Africans living on credit have enjoyed some respite over the last 6 months.
When asked the question "What do this year's rate cuts mean to you?" 34% of Justmoney users responded that the cuts have made paying existing debts more of a reality. A further 31% percent of the respondents said that they would continue to pay the same repayments as before the reduction in order to save on the total amount they would be paying over the course of their loan.
Ian Wason, MD of debt management and home finance experts BondBusters said that the results of the poll showed a level of financial savvy in South Africa that few people recognise.
"To be honest, I am surprised by the results of the poll. In the UK, Britons have put more than £8billion of equity (mortgage overpayments) into their property over the first quarter of this year and to hear that South Africans want to go the same route is commendable. Granted, interest rates in the UK are lower, but the fact that South Africans are not simply using the sudden excess cash for purchasing other goods is a great sign. Despite the hope that the good intention to overpay is there, it is very difficult and takes more self discipline to do this in South Africa than elsewhere - things like hikes in petrol and electricity prices make it very difficult.
If people are recognising that overpaying into things like a mortgage is one of the best way to take advantage of the rates cuts we might finally start putting a dent into the huge population of over indebted people living in this country."
He added that while overpaying into a bond was a great way to reduce the total costs of something like a homeloan there were currently very few people with the luxury of being able to do so.
Justmoney.co.za asked its users the question "What do the latest rate cuts mean to you?"
The results were as follows
- 34% said "I can now afford to pay more of my debts"
- 31% said "I will continue to overpay in order to save in the long term"
- 26% said "My savings are now dented"
- 9% said "I can now afford new shoes"
Andy Gilder, General Manager of Justmoney.co.za, said that results of the monthly polls were beginning to indicate an increased level of financial understanding by users of the site, and the website believes it is achieving one of its primary goals in better educating its users about money.
"While we do not give financial advice, one of our primary objectives is to create a better informed user. The responses and interaction we are seeing from our latest polls lead us to believe we are going some way to achieving this. In the past, polls like this would have thrown up 50% of the responses for people going out and grabbing new shoes. One could argue that the change in responses are a sign of the times, but over-paying into something like a bond is hardly the response you'd see from cash strapped consumers. We'd like to think that we are starting to engender a culture of financial savvy amongst our regular users and we'll continue to do our best to get the right information to users of our website."