Prime lending rates are set to hit a 17-year low of 12 per cent after the South African Reserve Bank yesterday (16 October) cut its repo rate by 1.5 percentage points.
This rate at which money is lent to commercial banks would decline to 8.5 percent from today (17 October), central bank governor Tito Mboweni said in Pretoria.
Commercial banks reacted swiftly, announcing cuts in their prime rates by the same margin.
Among the first to do so was Absa, which said its prime overdraft and mortgage rates would drop by 1.5 percentage points from Saturday 18 October.
First National Bank, Standard Bank, Nedbank, Old Mutual and People's Bank will offer cheaper loans from Monday (20 October), when their prime overdraft and mortgage rates will decrease to 12 per cent.
Explaining the decision of the central bank's monetary policy committee, Mboweni said inflation pressures had abated and would probably continue doing so.
