Debt levels declining after rate cuts

First National Bank (FNB) will cut its prime lending rate by 1% from 13% to 12%. The new interest rate will be applicable to all new and existing prime-linked loans, including home loans, from Monday 4 May 2009.

“We continue to urge borrowers to use declining rates as an opportunity to improve their financial position. Where possible customers with mortgages should maintain their payments at pre-cut levels, as this will significantly lower the overall cost of the mortgage,” says Michael Jordaan, CEO of FNB.

“Falling rates have resulted in an improvement in overall consumer indebtedness from 78% to 76%. We expect that this figure will fall further after today’s announcement,” added Jordaan.