Most people were absolutely delighted when the governor of the SA Reserve Bank, Tito Mboweni, yesterday announced that the repo rate would be lowered by a further 1,5 percentage points and rejoice in economists’ expectations that even more reductions in interest rates before the end of February next year might be on the cards.
“Although the latest drop in interest rates brought welcome relief for most people, it is unfortunately not good news to everyone,” says the Managing Director of Integrisure, Arnold van der Linde. “On the one hand it is to the advantage of the consumer in general, but it seriously and negatively affects some pensioners.”
Lower interest rates literally means more disposable income in the pockets of punch-drunk consumers. People who owe money on a mortgage bond, a car loan, a bank overdraft etc., now need to pay less each month in order to meet their obligations. Provided that one could afford it, it would be wise, though, not to reduce one’s repayments when interest rates are reduced, because by paying more than the minimum required amount each month, one’s debt is redeemed so much quicker.
The bad news of a drop in interest rates for many pensioners who depend on an income derived from interest on savings, is that the cloth according to which they have to cut their coat, decreases – with each reduction they earn considerably less on their investments. It is rather ironic that those who have no debt, should for all intents and purposes be penalised! Most pensioners have completely redeemed their mortgage bonds and don’t benefit from a reduction in interest rates at all, while people with bonds experience some relief and can even adapt their lifestyles and afford more luxuries.
The tables are turned every time Mr Mboweni reduces the interest rate. Pensioners and everyone who depends on an interest-based income, have to budget more carefully and eliminate all unnecessary expenses. But there is light at the end of the tunnel, however. If you review your short-term insurance regularly, you can, for instance, ensure that you don’t pay too much on your motor vehicle. By ensuring that you are not underinsured, you may also avert the risk of having to foot the bill yourself for damage in the event of a loss.
It is of the utmost importance that the services of a reliable broker be acquired who will look after your interests with integrity. Integrisure specialises specifically in the market for people older than 50.
Because people in this category are generally speaking more responsible and security conscious, Integrisure is able to negotiate on their behalf the most beneficial short-term insurance premiums possible. Amidst declining interest rates, it offers welcome relief and peace of mind to know that you’re not wasting money unnecessarily on insurance premiums, whilst still enjoying proper and adequate cover.