Rate hike painful but rewards possible for consumer

Jacques Celliers, FNB CEO.

First National Bank (FNB) will increase its prime lending rate by 0.25% to 9.75% following the decision taken earlier today by the SARB Monetary Policy Committee (MPC) to increase the repo rate. The new rate is effective on all prime-linked loans from Friday 20 November 2015.

“Today’s hike by the SARB will give us more domestic pricing stability and we will see the benefits to consumers in coming months. The immediate impact of increased loan payments will, however, place pressure on consumer confidence. We hope the hike will have the added benefit of providing additional currency stability after the recent steep devaluation – even though the SARB has stated this is not one of their primary objectives,” says FNB CEO Jacques Celliers.

“Sentiment is at a crossroads with low growth and high volatility in currency and equity markets. Naturally, we are seeing increased caution in second half of 2015 as growth has slowed. While consumers with loans will feel the pinch of reduced disposable income, customers such as our pensioners will see additional income flowing from higher rates on their deposits,” adds Celliers.

Says Sizwe Nxedlana, Chief Economist at FNB; “The SARB took decisive action today by announcing a pre-emptive rate hike that will address the mounting inflationary pressures in South Africa. By being ahead of the curve the SARB is trying to make sure that it won’t have to lift rates aggressively in the future. We think that this is a prudent approach which takes into account the current weakness within the economy. The gradual interest rate hiking cycle that is currently underway should help to encourage savings and maintain the purchasing power of the currency. As such it should be seen as a positive move, which supports macroeconomic stability.”

Consumer Information

FNB offers assistance in the form of a Debt Remedy facility from FNB Home Loans and a Special Repayment Arrangement offered by FNB Card.

FNB’s Investment Product House conducts weekly rates review meetings at which rates earned on non-prime linked investments are reviewed independently of the SARB’s MPC announcements. Revised rates are communicated via rates boards in branches and on FNB’s web site, www.fnb.co.za.