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Johannesburg - With the repo rate unchanged at 5%, there is little chance of people chipping away at the interest they owe, FNB's household and property strategist said after the announcement on Thursday.
"Slowing household deposit growth suggests that we should expect little in the way of further decline in net interest paid, unless interest rates decline further in future," said John Loos.
Earlier, SA Reserve Bank governor Gill Marcus said the repo rate would remain unchanged and so far Nedbank has confirmed the major banks' custom of also not changing their prime lending rate.
Loos said the decision to leave the rates unchanged was not surprising with consumer price inflation still testing the upper target limit (6%) at 5.9% in April.
"A rates unchanged decision appears more or less neutral for household/consumer demand at present," he said.
While the normal response of the household sector was to borrow more when rates were low, they should rather use the low interest rate environment to lower their debt-to-disposable income ratio.
He said little movement in interest rates since 2009/10 meant that the stimulus to economic and real household disposable income growth from previous cuts had more or less worn off, with a tapering off in real consumer demand growth and in real retail sales growth.
The slow down was expected to continue.
While the impact on households in the near term might be more or less neutral, the "combined monetary and fiscal policy impact" was negative because of rising effective tax rates on households, Loos said.
