South African commercial bank First National Bank, part of the Firstrand Group, on Wednesday afternoon joined Standard Bank and Absa in announcing a 100 basis point cut in its lending rates to 13,5%.
This followed the announcement by the South African Reserve Bank that it would be cutting the repo rate by 100 basis points to 10% with effect from Thursday September 11.
FNB’s prime rate cut is effective from Monday September 15. A similar reduction in home-loan rates of 1% has also been made for both new and existing home loans effective the same date.
“This unexpected boost to the economy is most welcome,” said FNB CEO Viv Bartlett.
“Added to the previous cuts, interest rates have now come down 3,5% in the past three months. We believe that the prospects for further cuts are good.”
FNB chief economist Dr Cees Bruggemans said that he expects the Reserve Bank to move cautiously but steadily for the remainder of the year in reducing rates.
“Barring any exchange rate or inflation rate surprises, we could see the prime rate fall to 12,5% this year.”
Standard Bank will reduce its prime and home-loan base lending rates with effect from Monday September 15. The rate changes apply to new and existing clients.
Absa’s prime rate reduction takes effect on Thursday September 11, while
its home-loan cut takes effect on September 11 for new business and from 15
September for existing business. — I-Net Bridge