Tag: interest rate

Applying for a home loan is the most important step on the home buying journey, but many first-time applicants are in the dark about what the banks – the institutions with the power to approve these home loans are looking for. The process is relatively straightforward, provided you have all your financial affairs in order.

The global economy is likely to recover as vaccines are administered. Pair this with low interest rates and the huge fiscal stimuli injected into the world’s largest economies, and you have a solid recipe for risk-on sentiment. Emerging markets assets, like those found in South Africa, bask under such circumstances.

The lowering of interest rates that formed part of government’s response to COVID-19 have been a huge help to most South Africans as they faced the combined challenge of a loss of income while still needing to keep up their repayments on their home, vehicle and personal loans and other credit agreements.

The bank is taking a cautious approach due to pandemic uncertainty but says payouts may resume as early as June. Nedbank won't be paying a final dividend for 2020 after rising credit impairments, fewer transactions and falling interest rates resulted in a big decline in full-year earnings. But it is confident that payouts will resume this year.

Since 2017, Interbank Offered Rate (IBOR) reform has been on the cards in many markets around the world. The use of the London Interbank Offered Rate (LIBOR) as a benchmark, is set to be discontinued.

The Monetary Policy Committee (MPC) decided to leave the repo rate unchanged at 3.5%. Three members of the committee preferred to leave rates unchanged, while two members preferred a 25 basis point reduction to the repo rate. This serves as a guide to the expectation that rates are more likely to decline than increase under current economic conditions.

The macro environment has been deteriorating over the past few years and this has been exacerbated by the COVID-19 crisis. As a result, the credit market has been characterised by deteriorating credit quality and credit spreads. The key credit cycle indicators that we look at confirms this market phenomena.

A sharp fall in the rate of consumer price inflation has defanged what was initially paraded as 'aggressive' monetary policy action intended to stimulate the floundering economy. Given a muted inflation outlook, and the depressed economic setting, the question is not if the South Africa’s Reserve Bank’s Monetary Policy Committee (MPC) will cut interest rates this week, but rather by how much?

Over the years, debt has gotten a pretty bad rap – and often for good reason. But it’s important to remember that not all types of debt should be painted with the same brush, and that there is such a thing as good debt. Knowing the difference between good and bad debt is crucial to wealth creation.

The South African Reserve Bank (SARB) Monetary Policy Committee (MPC) is meeting again - 21 July 2020 to 23 July 2020 - to discuss policy matters. The central bank lowered interest rates by a cumulative 275 basis points in the year so far, most recently making a 0.5 percentage point cut in lending rates on May 21.