Don’t have your Nedbank ID yet?
Nedbank ID single sign-on gives you full digital access to Nedbank’s banking and lifestyle products and services on the Money app or Online Banking.
Log in
Log in to Online Banking or another one of our secured services.
Bank how and when you choose to, with the low fees or extra benefits you want.
Shop online or instore and earn rewards for it, with up to 55 days interest-free credit.
Buy foreign banknotes, transfer funds or shop globally with a travel card.
Great interest rates, with great flexibility and access to your money when you need it.
Personalised interest rates for affordable loans from R2,000 to R300,000.
Loan up to 100% of the property value or up to 105% if you are a first-time home buyer.
Choose a plan for yourself, family or build your own cover to suit your needs.
Get cover for your car, building, house contents, valuables and more.
Cover your bond, credit card, overdraft, loan and car repayments.
Choose a plan for yourself, family or build your own cover to suit your needs.
Take the right steps to achieve your financial goals with expert financial planning.
Plan for everything you own and owe, so your estate is in order when you’re gone.
Accounts
-
Everyday banking Safety, convenience and rewards
-
Youth banking For under 16s, or under 25s
-
Accounts -
Digital wallet Your phone is your bank account
-
Private Wealth The globally integrated account
-
Goal saving Easy access to interest earned
Credit cards
Digital banking
Switch to Nedbank
Fraud awareness
Forex
Rewards
Accounts
-
On demand Money available at any time
-
In 24 hours Cash in your hand the next day
-
In 32 days Funds ready within a month
-
End of term Investments left until maturity
Investment services
Share trading
Personal loans
Home loans
Student loans
Overdrafts
Vehicle finance
Solar finance
Life cover
Funeral cover
Short term insurance
Credit Life
Travel insurance
Is your business covered?
Secure Investments
Financial planning
Estate, wills & trust services
Nedbank Private Wealth
Speak to a financial adviser
Blog
Talk to us
Find us
- Login & Register
- Online Banking
- Online Share Trading
- NetBank Business
- NedFleet
- Nedbank Greenbacks
- Nedgroup Investments
- Nedbank ID
- Bank
- Accounts
- Credit cards
- Digital banking
- Switch to Nedbank
- Fraud awareness
- Forex
- Rewards
- Explore Bank
- Accounts
- Everyday banking
- Youth banking
- Accounts
- Digital wallet
- Private Wealth
- Goal saving
- See all accounts
- Get help choosing
- Family Banking
- Refugees and asylum seekers
- FAQ
- How-to guides
- Everyday banking
- MiGoals Premium
- MiGoals Plus
- MiGoals
- Discontinued accounts
- Youth banking
- Nedbank4Me
- Digital wallet
- MobiMoney
- Private Wealth
- Private Wealth Bundle
- Goal saving
- MyPocket
- American Express
- Amex Gold
- Amex Platinum
- Digital banking
- Switch to Nedbank
- Fraud awareness
- Forex
- Send and receive
- Rewards
- Save & Invest
- Accounts
- Investment services
- Share trading
- Explore Save & Invest
- On demand
- Club
- Money Market
- Stokvel
- In 24 hours
- JustInvest
- PlatinumInvest
- Tax-free Savings
- MoneyTrader
- EasyAccess Fixed Deposit
- PrimeSelect
- In 32 days
- Electronic 32Day Notice
- 32Day Notice
- End of term
- Tax-free Fixed Deposit
- Electronic Fixed Deposit
- Electronic Optimum Plus
- Platinum Fixed Deposit
- Fixed Deposit
- OptimumPlus
- Investment services
- Share trading
- Borrow
- Personal loans
- Home loans
- Student loans
- Overdrafts
- Vehicle finance
- Solar finance
- Explore Borrow
- Personal loans
- Consolidation loan
- Secondhand car loan
- Home improvement loan
- Exclusive short-term loan offers
- Explore loans
- FAQ
- How to guides
- Consolidation loan
- Secondhand car loan
- Home improvement loan
- Exclusive short-term loan offers
- Home loans
- Building loan
- Switching home loan
- Repossessed properties
- Start your home buying journey
- Solar-energy Finance
- Earn R29,600 p/m or less? See offer
- HomeVision extra funds
- Home-buying Toolkit
- Managing your home loan
- Explore home loans
- FAQ
- How to guides
- Track application
- Building loan
- Switching home loan
- Repossessed properties
- Start your home buying journey
- Solar-energy Finance
- Earn R29,600 p/m or less? See offer
- HomeVision extra funds
- Home-buying Toolkit
- Managing your home loan
- Student loans
- Explore student loans
- Overdrafts
- Vehicle finance
- Solar finance
- Insure
- Life cover
- Funeral cover
- Short term insurance
- Credit Life
- Travel insurance
- Is your business covered?
- Secure Investments
- Explore Insure
- Life cover
- Get a call back
- Explore MyCover life
- Funeral cover
- Individual R10,000
- Individual R30,000
- Family Cover
- Build your own cover
- Get a call back
- Explore MyCover Funeral
- Individual R10,000
- Individual R30,000
- Family Cover
- Build your own cover
- Short term insurance
- Vehicle insurance
- Building insurance
- House contents insurance
- Valuables insurance
- Get a call back
- Explore MyCover short term insurance
- Vehicle insurance
- Building insurance
- House contents insurance
- Valuables insurance
- Credit Life
- Home loan credit life
- MFC Vehicle Finance Assurance
- Overdraft Assurance
- Balance Protection Plan
- Personal loan Assurance
- Get a call back
- Explore credit life
- Home loan credit life
- MFC Vehicle Finance Assurance
- Overdraft Assurance
- Balance Protection Plan
- Personal loan Assurance
- Travel insurance
- Is your business covered?
- Secure Investments
- Guaranteed Growth Plan
- Guaranteed Income Plan
- Get a call back
- Explore MyCover Funeral
- Guaranteed Growth Plan
- Guaranteed Income Plan
- Plan
- Financial planning
- Estate, wills & trust services
- Nedbank Private Wealth
- Speak to a financial adviser
- Explore Plan
- Financial planning
- Investment planning
- Insurance planning
- Give
- Retirement planning
- Investment planning
- Insurance planning
- Give
- Retirement planning
- Estate, wills & trust services
- Will drafting
- Ensure your estate is managed by an executor | Nedbank
- Trust services
- Financial accounting
- Tax services
- Leave the admin of your estate to us, and not to your loved ones | Nedbank
- Will drafting
- Ensure your estate is managed by an executor | Nedbank
- Trust services
- Financial accounting
- Tax services
- Leave the admin of your estate to us, and not to your loved ones | Nedbank
- Nedbank Private Wealth
- Speak to a financial adviser
- Learn
- Blog
- Explore Learn
- Blog
- Contact us
- Talk to us
- Find us
- Explore Contact us
- Talk to us
- Find us
What does the July repo rate increase mean for you?
What does the July repo rate increase mean for you?
Staff writer
Posted 02/08/2022 Updated 13/11/2023 5 mins
Debt could cost you more, but your investments could earn more too.
In 2020 the South African Reserve Bank (SARB) decided to decrease the repo rate drastically to an astonishing all-time low of 3.5%. This was to help ease the knock-on effect that the Covid-19 pandemic was having on the economy as intermittent lockdowns hammered businesses and tourism.
The repo rate is the rate at which SARB lends money to commercial banks like Nedbank. It is linked to the prime interest rate – the base rate used by banks when lending money to clients. So, a change in the repo rate will affect anyone who owes money on a home loan, personal loan or credit card and is charged a variable interest rate.
That’s a distinction to remember whenever you sign a contract for a credit product. If you opt for a fixed interest rate, it will probably be higher than the initial variable interest rate offered on the same loan. But that fixed interest rate never changes over the loan period – you pay the same amount every month, no matter what happens to the repo rate. A variable interest rate changes as the repo rate changes, so while a loan might start off cheaper at a variable interest rate, that benefit could disappear rapidly if the repo rate rises sharply.
The latest repo rate hike explained
On Thursday, 21 July 2022, South Africa saw the biggest repo rate increase in almost 2 decades: 75 basis points, or 0.75%, bringing the rate to a whopping 5.5% and the prime lending rate to 9%. This latest hike was prompted by consumer inflation reaching 7.4%, which is the highest it’s been in more than a decade.
After the May 2022 increase in the repo rate by 50 basis points, following 2 hikes in November 2021 and January 2022 of 25 basis points each, inflation continues to pressure consumers with rising food and fuel prices. The current situation is largely a result of the continuing Russian invasion of Ukraine, which is likely to last throughout the year and have significant effects on global prices. According to Lesetja Kganyago, governor of SARB, ‘Inflation continues to surprise to the upside.’
What this means for your debt
Variable interest rates on your home loan, vehicle finance or any other debts will increase. If you owe R2 million on a home loan at a prime interest rate of 9%, for example, your monthly payments will increase by about R950 a month.
The repo rate hike at least has a silver lining for those who have planned and invested wisely
A higher repo rate could make it harder for you to manage your payments every month, so you might need to reassess your monthly budget. Even if you can afford your new debt payments with surplus money to spare, there’s no guarantee that interest rates won’t rise again if inflation remains unchecked. Now is the time to save and invest any extra money to help you survive any future shocks, rather than taking on more debt.
What this means for your savings and investments
The repo rate increase means a higher return on investments and savings, so it can help you meet your medium- and long-term savings goals. Now is a good time to add more money to your savings, or to start a tax-free investment and take advantage of the better interest rates. You could also add more money to your retirement annuity and get better returns to enjoy in your golden years.
What this means for your spending
You might want to reconsider big life-changing purchases like buying a home, because property prices tend to increase as the repo rate rises. You won’t have the same buying power as you did previously because a home loan is going to cost you more in interest. You may have to adjust your ambitions to find an affordable home that suits your needs.
The rising interest rates are also a reminder that it makes sense to pay more than the minimum every month on any debts you have, if you can afford to. Paying more than the amount due helps you reduce the capital balance owed faster, and since the interest is calculated on the remaining capital balance every month, you pay less interest in total. This strategy is particularly helpful for large, long-term debts like home loans.
What this means if you’re already retired
This repo rate increase is a bonus for those who are dependent on savings or living annuities. A higher repo rate means higher interest rates on these investments, giving you higher returns. So, although it’s bad news for debtors, the repo rate hike at least has a silver lining for those who have planned and invested wisely.
Make better money choices while the repo rate is high and start building wealth. Nedbank offers you a range of investment and savings plans to suit your medium- and long-term financial goals.
This information is intended for general information purposes only and does not constitute financial advice.