Debt cost is 12% of income
Business Report’s Ethel Hazelhurst:
“Households are paying about 12 percent of their household income in interest costs, according to Dennis Dykes, the group economist of Nedbank.
At a presentation yesterday, he said the percentage was higher than it was at the peak of the last rate-rising cycle in 2003, when it remained below the long-term average of just more than 9 percent. But it had not yet reached the peak of about 15 percent in 1998-99.
Dykes said the risk of a further interest rate increase, when the Reserve Bank’s monetary policy committee (MPC)meets next month, had increased in the past weeks.
The central bank’s benchmark CPIX (consumer price index minus mortgage costs) has been above the ceiling of its 3 percent to 6 percent target range since last April.
Dykes said it would move towards 9.9 percent this month and next month. And the outlook for inflation had deteriorated as record oil prices continued to boost inflationary expectations.
The MPC tends to raise interest rates when inflationary expectations rise.”
Leave your response!