If you thought that you are now paying too much for things you didn't quite even put any thought into buying in the past, like oil, wait to hear more bad news for South Africans.
So you work hard, and deserve to eat well; live well, etc with your money. Right? Yes well, that is the theory, but the economy doesn't quite see things that way.
Besides the hike in oil prices and grain, because of the Ukrainian invasion, we South Africans have a looming petrol hike, and now are about to face the Reserve Bank's repo rate hike. This is all after we come out of a bad case of COVID 19.
I believe that the oil prices were not quite caused by the Ukrainian invasion directly, but because of panic buying, by people, just like the repo rate that will be increased by people who know very well how hard things are. So what is this repo rate, and how necessary is it for it to increase?
The repo rate is the rate at which the South African Reserve Bank (SARB) lends money to the commercial banks – therefore meaning that it dictates the prime lending rate – the rate that consumers are charged when borrowing money.
The last repo rate was 4.25%. This means the prime lending rate is 7.75%. Recent increases: 0.25% in November 2021. 0.25% in January 2022. However, when this goes up on Thursday, we will be paying more on our bonds, car finances, etc.
From today, the repo rate is 4.75%.
What does this me for us all? Imagine that this new repo rate means that it now costs an additional R400 per R1 million rand bond. So if your house bond is R1 million, then you will pay an extra R400 per month, that is R4800 per month, and R48 000in 10 years - so on, and so on.
So, while you go buy your expensive oil, think long and hard if it is worth your while to use the bank for any financial assistance for things that you don't really need.
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