Repo rate cuts help household finances

A household resilience report has revealed a "modest improvement" in the financial position of South African households, with the ratio of household debt costs higher than in 2021.

- Faizel Patel

According to the Altron Fin-Tech Household Resilience Index (AFHRI), the improvement was mainly due to three cuts of 25 basis points each in the repo rate between September 2024 and January 2025.

This led to the lowering of the prime overdraft rate to 11% from a record high of 11.75%.

Economist Dr Roelof Botha, who compiled the report, said households are not out of the woods yet.

"At the latest meeting of the monetary policy committee [MPC] of the Reserve Bank the rate-cutting cycle was halted, which will prevent the debt cost burden of households from dropping to a level that would encourage a more permanent recovery of household expenditure," said Botha.